UTI launches Gold Exchange Traded Fund

Lucknow, Feb 26 (UNI) Retail investors, as well as financial institutions, NRIs and FIIs, can now trade in gold on the stock exchange, just like the common shares.

India's mutual fund behemoth, UTI Mutual Fund today announced the launch of UTI Gold Exchange Traded Fund from March one.

The New Fund Offer (NFO) closes on March 12 and would be listed on the National Stock Exchange (NSE). It is quite different from trading in gold in a commodity exchange.

Exchange Traded Fund (ETF) is a Mutual Fund scheme listed on the stock exchange like common stock. It will also offer wealth tax benefits with assurance of quality gold at cheaper prices.

The traded prices of ETF units on the stock exchange reflect, the value per unit of the underlying assets of the fund. They enable investors to gain exposure to indices or the underlying asset at a lower cost than any other form of investing.

Addressing a conference here today, Ramesh Meena, Regional Head (North), UTI Asset Management Company said the company has set a target of mopping up Rs 1,000 crore pan India under the scheme.

UTI Gold Exchange Traded Fund is an open-ended exchange traded fund designed to track the performance and yield of the underlying asset viz gold. The scheme would be invested in gold bullion and will reflect the international price of gold in the market.

Keeping 10 per cent of the fund in liquid cash, UTI Mutual Fund would buy gold from the London Metal Exchange (LME) at the listed prices. The bullion would be kept in custody of Bank of Nova Scotia in Mumbai.

''Once, the fund is listed on NSE, the subscribers can trade in gold units just like scrips and sell or buy at their discretion,'' Mr Meena informed.

He said gold was a globally accepted asset class and offerred good option as hedge against inflation and stock market fluctuation.

Every unit of the Fund will approximately represent one gram of pure gold. Units allotted under the scheme will be credited to investors' demat accounts, he added.

UTI Mutual Fund has assets under management (AUM) of over Rs 37,500 crore and investor accounts of over 7.7 million under its 65 domestic schemes.

However, it now trails Reliance as the country's largest mutual fund company.

UNI