[incizarry]

Cashing on the investors' frenzy for gold, mutual funds have lined up products to let investors increase their exposure to the yellow metal without actually owning it in physical form. In the last two months, fund houses have filed draft offer documents with the SEBI for launching four new gold related schemes for investors.
These include Canara Robeco Gold Savings Fund, Canara Robeco Gold Exchange Traded Fund (GETF), IDBI Gold Fund of Funds and BNP Paribas Gold & Income Fund.

“Gold prices have climbed sharply in last few years making it hard for a small investor to buy it directly from the market. Gold related schemes of mutual funds enable small investors to gain exposure to gold by investing smaller amount of money in the scheme's units,“ Mr Ritesh Jain, head of investment, Canara Robeco Mutual Fund, said.

The growing popularity of gold related schemes among small investors could be gauged by the fact that the total asset under management of Gold ETFs has almost doubled from `4,800 crore in April 2011 to over `9,568 crore in November 2011 according to data available with Association of Mutual Funds in India.

“Investors are chasing returns as gold has been the best performing asset classes compared to others in the last two years,” observed Mr Dhirendra Kumar, chief executive officer, Value Research. Mr Kumar added that the convenience of buying and selling units of Gold ETF on the stock exchange platform as compared to physical gold is also one of the factors that are attracting investors towards these products. Apart from the ease of transaction, there is no sales tax and VAT chargeable on investment in gold made through ETFs.

Additionally, the minimum investment for GETF is one unit, which equals to 1 gram in most schemes and multiples thereof suiting small investors requirement. Another advantage is that few banks and NBFC like HDFC Bank, IDBI, Edelweiss and India Infoline among others are accepting GETF as collateral while advancing loans.

-dc chn