Gold ETF outshines Sensex, posts 35% returns

With gold prices surging past Rs 16,000 mark, the Gold Exchange Traded Fund (ETF) has given a return of about 35 per cent in the last one year outperforming Sensex that increased by 10.5 per cent.

"Gold ETF in the last 12 months has given returns close to three times of Sensex," Kotak Mutual Fund Head Fixed Income and Products Lakshmi Iyer said.

Last week, gold achieved a new peak at Rs 16,100 per ten grams, after the precious metal in the overseas markets surged to $1,003 an ounce to a six-month high as a weaker dollar boost its appeal as an alternative investment.

With most of the asset classes giving positive returns, investment demand for gold is rising, she said, adding, there has been a net inflow of about Rs 80 crore in the last three months (June-August).

Assets in such exchange-traded funds increased to about Rs 875 crore at the end of August, she said.

Launched in 2007, Gold ETFs are managed by six fund houses including Benchmark Asset Management, UTI Mutual Fund, Kotak Mahindra Mutual Fund, SBI Mutual Fund, Reliance Capital Asset Management and Quantum Mutual Fund.

Elaborating on the investment in such instruments, Iyer said, it is a hedge against volatility in the equity market.

Besides, with the ETFs there is also no problem of storage unlike in the case of physical gold as its ownership is recorded electronically, she added.