The Hindu Business Line : Benchmark AMC, UTI to float gold exchange traded funds

Indian investors can now trade in gold on bourses through the much-awaited gold exchange traded funds (gold ETFs), which will be floated initially by Benchmark AMC and UTI AMC. The two asset management companies received the nod from SEBI on Wednesday to launch the gold ETFs.

The gold ETF from Benchmark, `Gold BeES' will be an open-ended scheme tracking the price of gold through investments in physical gold. The minimum amount of investment for cash is Rs 10,000 and in multiples of Rs 1,000, thereafter.

Benchmark gold

The AMC will finalise the custodian for Gold BeES shortly, said Mr Rajan Mehta, Executive Director, Benchmark Mutual Fund. Benchmark AMC was the first to moot the gold ETF.

UTI custodian

UTI AMC has appointed Bank of Nova Scotia as the custodian for its UTI gold ETF, an open-ended scheme. The units issued under the UTI gold ETF will be referred to as UTI Goldshare and will have a face value of Rs 100 each.

Both the funds will be later listed on NSE as per SEBI regulations.

Kotak Mutual fund has also filed for its gold ETF and is awaiting clearance from the capital market regulator. The gold ETFs will track the price of gold and the custodians appointed by the AMCs will buy and sell gold bullion.

The funds will invest up to 90 per cent of their total assets in physical gold. The remaining can be invested in money market instruments and other debt securities.

Earlier, SEBI said that the valuation for gold held by a gold ETF scheme would be at the AM fixing price of London Bullion Markets Association (LBMA) in US dollars per troy ounce for gold having a fineness of 995 parts per thousand.

The gold ETF was proposed by the Finance Minister, Mr P. Chidambaram, in the Union Budget 2005, asking the SEBI and the RBI to allow the introduction of gold ETFs with gold as the underlying asset.