MUMBAI:UTI Asset Management Co. Pvt. Ltd. envisages the rapidly-growing class of Indian equity investors to be the first takers of its gold exchange-traded fund (ETF), company officials said on 19 February.
“Initially, the informed investors would come in to invest,” U.K. Sinha, chairman and managing director, said at a press meet after the launch of UTI mutual’s gold ETF. “Retail investors may not know of it right away.”
UTI Asset Management is India’s second-largest mutual fund.UTI Gold Exchange Traded Fund would be open to investors between 1March and 12 March, with the minimum application amount at Rs20,000 , the company said.
The ETF would be listed on the National Stock Exchange (NSE) in April with one unit of the fund representing approximately one gram of gold.Sinha said there were about 20 million investors in the equity market who would be the ideal target for the gold ETF.
“Even if they put in 10 % of their portfolio into gold ETFs, it would be a substantial investment,” he said.“This would be a supplement to the equity portfolio,” A.K. Sridhar, chief investment officer of UTI Asset Management, added.Sinha said India accounts for 35 % of global retail investment demand in gold, making it an attractive destination for gold ETFs.
UTI mutual’s gold ETF would be watched keenly by those studying the success of paper gold in India as it is a well-entrenched player with over 375 billion rupees worth of assets under management.
The fund would face competition from Benchmark Asset Management Co. Pvt. Ltd., which is already taking applications, and at least four other companies who have sought the market regulator’s approval for gold ETFs.Benchmark’s minimum subscription amount is half that of UTI mutual.
Globally, at least 10 gold ETFs have generated considerable interest among those dealing in the bullion market as their total stock of gold - around 600 tonnes - has often influenced market sentiment.