Crisil launches gold index

At a time when investors are parking their funds in gold to avoid losses from investments in riskier assets, ratings agency Crisil has come up with an index to track the prices of the yellow metal. The index will indicate returns given by gold ETFs.

Crisil on Monday launched a gold index to establish a uniform benchmark for instruments (like Exchange Traded Funds and fund of funds), with gold as an underlying investment. The index will track the performance of gold prices in the domestic market. Currently, there are 11 gold ETFs and three gold FoFs, for which fund houses calculate values on their own.

“The Gold Index will address a lot of inconsistencies in the market and will give an opportunity to use it as the benchmark for evaluating the performance of various gold products,” said Tarun Bhatia, director-capital markets, Crisil Research. With January 2, 2007, as the base date, the index is based on the landed price of 10g gold in Mumbai. It will be publicly accessible on the company’s website on a daily basis.

Bhatia said gold ETFs have gained momentum recently and more are expected to be launched. “ETFs as a concept is picking up and in the long term, we believe more fund houses would like to add it to their portfolio,” he said.

Crisil said the average assets under management (AUM) under this category have grown from around Rs 1 billion in March 2007 to Rs 60 billion as on June 2011. Globally, AUM of Gold ETFs has grown to $100 billion as on June, against $14 billion in April 2007.