SEBI has allowed AMCs to hold gold certificates issued by banks in physical form. Earlier AMCs were supposed to hold these certificates only in dematerialized form.
In February, SEBI allowed Gold ETFs to invest up to 20% of their net assets in gold deposit schemes (GDS) of banks following the finance ministry’s move to link gold deposit schemes of banks with Gold ETFs. “The advantage will be that a part of the gold lying in stock will be brought into circulation and will partially meet the requirements of the gems and jewellery trade. It is hoped that, consequently, there will be a moderation in the quantity of gold that is imported into the country,” stated a press release issued by finance ministry on January 21, 2013.
Before investing in GDS of banks, mutual funds need to have a written policy with regard to investment in GDS.
Investing in gold deposit schemes of banks helps Gold ETFs/gold fund of fund schemes to get incremental returns which helps the performance of Gold ETFs.
As on September 2013, there are 14 Gold ETFs managing Rs. 10415 crore.
