UTI MF to launch gold fund

UTI Mutual Fund is launching a gold exchange traded fund. The fund house has filed a draft offer document for the same with the Securities and Exchange Board of India.

UTI Gold-ETF is an open ended fund listed on one or more stock exchanges in the form of exchange traded fund (ETF) tracking gold.

The fund would be a passively managed one, designed to track the performance and yield of gold prices or gold-related instruments, the offer document said.

Each UTI Goldshare unit represents units of fractional undivided beneficial interest in the ownership of the underlying assets (i.e. gold) of the scheme.

"Allotment price will be on the basis of the closing value of the gold price on the closure of new fund offer period. Subsequently, the authorised participants can deposit cash for creation of units or they can redeem units.

The prices of gold considered for the purchase of creation of units will be the prices on the day on which the bank is able to acquire gold from the market.

The prices of gold taken for redemption of units will be the prices of gold on the next working day of redemption date," the offer document said.

In the beginning, each unit of UTI Goldshare will be equal to price of one gram of the value of gold.

Once the scheme reopens, issue and redemption of units will be linked to the prevailing net asset value, it added.

Earlier, Benchmark Mutual Fund had filed its offer document for launching a similar fund.