Indian Gold exchange traded funds (ETF) have given investors the highest ever monthly return of over 15% in August following the surge in the global gold prices. According to the Morningstar India, in September 2008 Gold ETFs had given returns of 14.2% amidst the financial meltdown in the global markets.
Internationally, the precious metal continued to rally due to weak US economic data and on the back of impending credit worries in the Eurozone. Gold prices touched a historic high of above $ 1,911 in late August before retracing some gains and closing the month with a gain of 11.4%.
Dhruva Raj Chatterji, senior research analyst at Morningstar India says, ?In the last few months there has been huge interest in Gold ETFs as their prices have shot up sharply. It has already given a double digit return in the last two years, compared to other equity funds which have remained almost flat in terms of returns. However, investors should only look at investments in gold as hedge against inflation.?
In the current calendar year so far, Gold ETFs have given return of over 29% while in the last one year it gave high return of over 40%. On the other hand equity funds have given negative returns in the last one year.
The recent spurt in gold prices has led to inflows coming into the Gold ETFs. In the current calendar year itself, Gold ETF have seen inflows of over R2,000 crore. Many fund houses have also started to offer systematic investment plan option in the Gold ETFs.
Currently, there are over dozen of Gold ETFs in India. Fund houses like Baroda Pioneer MF, Motilal Oswal MF, IDBI MF and Birla Sun Life MF are planning to come out with the gold funds and have already filed an offer document with market regulator Securities and Exchange Board of India.