Kotak MF files for gold ETF with Sebi

Kotak Mutual Fund today filed its draft offer document with the Securities and Exchange Board of India (Sebi) for gold exchange traded mutual fund scheme, becoming the third fund house after Benchmark and UTI to enter this innovative product.

As per the document available on the Sebi website, the Deutche Bank and Standard Charted Bank would be the custodians of the fund.

It would invest in gold in domestic markets, gold related instruments and track the spot price of gold in domestic markets. The fund might also be engaged into gold lending, and deposit gold with banks in return for fees. The scheme's performence would be benchmarked against price of gold.

"The benchmark may be changed in future, if a benchmark better suited to the investment objective of the scheme is available," the offer document said.

The exposure of gold and gold related instruments would be 90-100 per cent, while that of debt and money market instruments would be up to 10 per cent.

The mutual fund industry is presently awaiting Sebi nod for the launch of first Gold ETF, as the market regulator has already made two amendments to concerned regulations, permitting the custodians to hire services of third party depositories.