First gold ETF debuts on NSE

Benchmark Asset Management Company, a Mumbai-based mutual fund house, listed Gold BeES, the country's first gold exchange-traded fund (GETF), on the National Stock Exchange on Monday.

Listing at Rs 1,000.30 a unit, or a gram, Gold BeES gained momentum surging to Rs 1,104, but slumped to Rs 947 within an hour of the launch due to profit booking. The unit closed at Rs 947.80, a marginal rise of Rs 2.10 over the allotment price of Rs 945.70, witnessing a total traded quantity of 66,436 units and a turnover of Rs 631.28 lakh.

The trading unit for BeES has been fixed at 1 gram with a tick size of 1 paisa. The units can be held in demat form.

"Gold BeES, like any other mutual fund instrument, would attract common men to save in small quantity with a minimum possible monthly balance of Rs 1,000 (roughly equivalent to the price of 1 gram gold) which, if continued, may accumulate over a period of time to give handsome returns on occasions such as a daughter's wedding or higher education for children," said A P Kurian, chairman of the Association of Mutual Funds in India (Amfi).

He further said the new year was adding a new benchmark in the history of mutual funds, with the addition of Gold BeES in the securities portfolio. Looking at the success of GETFs in the countries such as the US, South Africa and Australia, which have created an asset of about $12 billion, India is all set to attract a good amount of retail participation, Kurian hoped.

Physical gold buyers have always been at the receiving end, suffering losses when converted the yellow metal into ornaments or when selling it. But, a buyer of GETF can be proud of owning gold without touching, handling and storing it.

Benchmark floated the instrument with an initial amount of Rs 100 crore with the hope of touching Rs 1,000 crore in the near future. According to Dr S A Dave, chairman of Benchmark Trustee Company, GETF has witnessed immense success overseas and recorded a 500 times growth in the last 13 years.

"This is just the beginning, as many more MFs are all set to launch the instrument very soon with tremendous potential of success," said Sanjiv Shah, executive director of Benchmark.

Kurian hoped the delivery for such instruments would begin in the near future. Prithviraj Kothari, an authorised participant, evinced interest over taking care of the delivery of gold traded through the exchange-traded fund.