Assets in gold-backed exchange traded funds in India could increase to a record half year profits as demand, an investor awareness spreads and more products are introduced, according to executives in the largest bullion user.
“It’s certainly possible to double,” said Rajan Mehta, executive director of Benchmark Asset Management Co., the nation’s largest gold exchange-traded funds is, or ETF. Money is managed by Indian funds, gold climbed to a record high 35.2 billion rupees ($ 780,000,000) last years of 13.5 billion rupees for 2009, according the Association of mutual funds of India data.
The expected expansion in India in gold adds to signs, there is growing emerging market demand for precious metals investments, which can help to support prices. Lion Fund Management Co., set up first China gold fund is invested abroad at the fair traded products, said yesterday that 483 million U.S. dollars increased. Gold traded at a record last month.
“In 2011 we have a phenomenal growth seen in the ETF segment,” Ajay Mitra Managing Director for India and the Middle East for the World Gold Council said today in an interview from Dubai.
Gold for immediate delivery gained 0.3 percent to $ 1,385.40 an ounce at 1:10 pm in Mumbai. Metals, that rose to an all-time high of $ 1,431.25 last month, got for a 10th year in 2010 as investors sought protection from the weak currencies, the European debt crises and the resurgence of inflation.
Concerns about rising inflation in India could help drive demand for gold, Mitra said. India may this week that the benchmark wholesale price index rose from a one year low in December due to rising food prices to report.
“High on the agendas
Inflation “is high on the agenda, which I think is good for controlling the proposition of investing in gold for the future,” said Mitra.
Exchange-traded funds have become popular worldwide since they formed in 1993 as it broadened investors access to different types of assets. Gold ETFs offer investors the gold trade, without physical delivery.
India gold-backed funds were launched in 2007 with 10 now in operation. Demand for precious metals as an investment in India, the world’s second most populous country, rose 73 percent in the 12 months to Sept. 30 according to the World Gold Council data.
Growing awareness of the new gold ETFs and funds to start it will help to stimulate investments said Swati Kulkarni, Mumbai-based UTI Asset Management Co., a manager of third-largest gold-backed fund of India. “The trend is likely to persist,” she said.
Inflow
‘The growth of assets under management in gold should be higher than the gold yield per se because there are more people watching this, “said Kulkarni. Flows into gold ETFs in December was 1.1 billion rupees, with investors to add money to them within 11 months from 12 in 2010, data from fund association website shows.
Assets held in gold funds have risen from 12 tons to 16 tons, said Mitra.
In China there is “a real boom in the retail investments in physical gold,” according to remarks last month by Tom Kendall, an analyst at Credit Suisse Group AG in London and the most accurate predictor of gold for 2010. Gold may climb as high as $ 1,630 this year, as investors seek a safe haven and as Chinese demand is rising, Kendall predicted.
Gold companies in the SPDR Trust, the largest ETF backed by bullion, fell to 21.1 tonnes from 1,271.47 tonnes on January 11 according to figures on the website of the company.
source:bloomberg
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