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First gold exchange- traded fund from Benchmark

First gold exchange- traded fund from Benchmark
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First Published: Wed, Jan 31 2007. 04 51 PM IST
Updated: Wed, Jan 31 2007. 04 51 PM IST
Benchmark Asset Management Co., an Indian money manager, plans to sell securities backed by gold from Feb. 15, the first such offering in the world’s biggest buyer of the metal, a company official said. Benchmark, which manages 79.4 billion rupees ($1.8 billion) mostly in index-linked funds, will sell gold exchange-traded funds, or ETFs, with each unit representing 1 gram of gold, Benchmark executive director Rajan Mehta said at a news conference in Mumbai. Exchange-traded funds have grown in popularity since they were created in 1993 as they widened access to a different type of assets. The World Gold Council, a producer group supported by the biggest miners of the precious metal, plans to sell the securities in India as well as in Italy, Germany, Belgium and the Netherlands, Chief Executive Officer James Burton said Jan. 12. “We are hoping to get some of the investors who have been investing in physical gold to park some money in ETFs,” Benchmark’s Mehta said. The exchange-traded fund, which will enable investors to trade gold without taking physical delivery of it, will be listed on the National Stock Exchange, Benchmark said. Benchmark has appointed the Bank of Nova Scotia as the custodian for the fund, which will initially be open for subscription till Feb. 23, Mehta said. Households in India have 15,000 tons of gold worth $200 billion locked away in family vaults, according to consultant McKinsey & Co. Investment demand for bullion in India, which uses more gold than the U.S. and China combined, was estimated at 100 tons annually as more and more people view the metal as a haven at times of inflation, Mehta said. Prudential ICICI Asset Management Co., in which the UK’s second-biggest insurer Prudential Plc owns a 49 percent stake, UTI Mutual Fund, India’s biggest money manager, Kotak Mahindra Asset Management Co. and Tata Asset Management Co. are planning to offer similar gold-backed exchange traded funds. Gold for immediate delivery gained 23 percent last year, reaching a 26-year high of $730.40 an ounce in May.
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First Published: Wed, Jan 31 2007. 04 51 PM IST
More Topics: Money Matters | Mutual Funds |