Gold ETFs continue to drive investor interest: S&P DJI

Last Updated: Wed, Nov 21, 2012 07:15 hrs

Even as gold prices are running high currently, investor demand for gold exchange traded funds (ETFs) will be robust in the Indian market, said S&P Dow Jones Indices (S&P DJI), a global indices player.

According to S&P DJI data, gold holding under gold ETFs in India over the past four quarters has stood at 165 tonnes. This is roughly a fifth of India's import of gold this year. Over the past four quarters, India has imported 761 tonnes gold, according to World Gold Council figures.

India Inc. played a major role in the rising trend of investing in gold through ETFs, as half of the assets under management (AUM) of these ETFs in India is held by corporates. According to the data compiled by BS Research Bureau from the Association of Mutual Funds in India, total AUM of gold ETFs till September-end has been Rs 11,198 crore, out of which corporates hold gold worth Rs 5,943 crore.

AUM (Rs crore)

Sep '10 Mar '11 Sep '11 Mar '12 Sep '12
Corporates 1,011.14 1,439.94 4,176.39 5,398.10 5,943.59
Banks/FIs 17.47 511.36 21.83 4.03 9.80
FIIs 0.28 1.51 2.98 0.82 1.80
HNI 955.64 1,226.71 1,762.54 1,878.39 2,143.80
Retail 865.23 1,220.68 2,220.66 2,604.70 3,099.87
Total 2,850 4,400 8,184 9,886 11,199
Source: AMFI India Compiled by BS Research Bureau

"We see significant investor interest coming up for gold ETFs in India. Demand for gold varies by region. In India, gold demand has increased from 46 per cent to 55 per cent of world demand," said Jodie Gunzberg, director, commodity indices, S&P DJI.

"Gold demand in India and China has grown this year more than the five-year average demand growth in these countries. In the US, the growth has declined from the five-year average," said Gunzberg in a conference call on Tuesday.

According to Koel Ghosh, head - business development (South Asia) S&P Dow Jones Indices, the growth of India's gold ETF market has been robust over the past couple of years.

"ETF market in India has grown by about 87 per cent since September 2009, while the number of investors has grown by 71 per cent during the same period. There are about 34 ETFs in India with Goldman Sachs, Reliance, Kotak and Motilal among the major players," said Ghosh.

Commenting on the global gold investment scenario, Gunzberg noted that a concept called inflation protection is gaining momentum.

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