Gold ETFs gain while stocks slide

Gold exchange-traded funds (ETFs), though new to India, have become a hit with investors given the benefits of investment in gold paper as opposed to holding the yellow metal as jewellery.

ETFs are instruments that are traded like shares and are backed by physical holdings of the commodity.

India, as the world's top consumer of gold, accounts for 20 per cent of global demand and traditionally Indians have preferred to invest in gold jewellery as many of its 1.2 billion population live far from a bank.

Meanwhile, SBI MF has plans to launch a gold fund of funds next week in view of the rising interest in gold-related products.

Srinivas Jain, senior vice-president and chief marketing officer of SBI MF, said gold ETFs were doing well with the rise in gold prices, but they had their own problems like lack of counselling. He said the fund would come up with a gold fund of funds, with a target to raise funds that were double that of its gold ETF.

Meanwhile, redemption pressures are mounting on equity mutual fund (MF) schemes with the rising volatility in the equity market, though they are yet to reach alarming proportions. Also, many fund houses are seeing a shift towards debt schemes in line with the rising interest rate scenario.