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Fund
houses are pushing gold fund-of-funds to attract retail investors because of
the constraints in investing in gold ETFs via demat accounts.
AMCs have taken the fund-of-funds route for making
gold ETFs popular among retail investors, especially those who do not have a
demat account. Most fund houses which run gold ETFs have launched gold
fund-of-funds. The latest to join the bandwagon is Goldman Sachs Mutual Fund.
It filed an offer document with SEBI recently to launch a gold fund-of-funds.
This fund will predominantly invest in its Gold BeES.
Though IFAs have not been very active in recommending
ETFs, gold funds are more popular among distributors for a number of reasons.
Investors do not have to bear any annual maintenance charges or pay brokerage
for buying gold funds. AMCs which have launched gold fund-of-funds have also
promoted the advantages of investing through the physical route rather than
ETFs.
“Gold funds can attract a large number of investors.
These funds allow investors to invest in gold ETFs without a demat account. A
gold fund-of-funds cannot buy gold directly, so the corpus is invested in gold
ETFs,” says Debashish Mallick, MD & CEO, IDBI Mutual Fund.
The trend caught on after Reliance launched its
Reliance Gold Savings Fund last year. IDBI Mutual Fund which launched its gold
ETF in November 2011 has also filed an offer document with SEBI for its IDBI
Gold Fund of Fund. Similarly, Canara Robeco has filed for its Canara Robeco
Gold Savings Fund.
Recently Union KBC has filed an offer document with
SEBI for its Union KBC Gold Fund. Principal and IIFL have also sought SEBI
approval for launching gold ETFs.
Only two AMCs—UTI and Motilal Oswal—who have gold ETFs
have not launched their own gold fund-of-funds yet. Nitin Rakesh, MD & CEO
of Motilal Oswal AMC, had told Cafemutual earlier that the fund house is
looking at a gold fund-of-fund launch.
Another
reason for the sustained interest in gold funds is the fact that the category
continues to be favoured by investors. Lakshmi Iyer, Sr. VP and Head – Fixed
Income & Products, Kotak MF, believes that gold could continue to attract
investors’ attention in the year ahead. “The possibility of stagflation in the
economy may give rise to uncertainty in the equities and debt market. On
account of that gold may continue to remain one of the key investible assets in
the year ahead.”
The assets managed by gold ETFs have gone up to Rs
10,218 crore in April 2012 from Rs 4,400 crore as on March 2011.
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