On the back of a fat return of 22% and 25% by gold exchange-traded funds (ETFs) in 2009 and 2008, respectively, mutual funds continue to launch more gold ETFs. Religare Asset Management Co. Pvt. Ltd is the latest to join the party with Religare Gold Exchange Traded Fund (RETF). This is a passively managed fund that will aim to mirror gold price movements. One unit of RETF will be equivalent to a gram of gold. The fund will be listed on the National Stock Exchange as well as the Bombay Stock Exchange.
On the face of it, there’s nothing new that RETF offers, except that the fund house aims to complete its product suite. Most gold ETFs in India are new so they haven’t yet completed a year—a mandatory time period to compute a fund’s tracking error. The lower the tracking error (the difference between the fund’s return and benchmark’s return), the better is the ETF.
(Ashwin Ramarathinam contributed to this story.)