No immediate plan to launch ETF in India, says WGC

The World Gold Council does not plan to launch a gold exchange traded fund in India, James Burton, chief executive officer, has said.

India currently has five gold exchange traded funds listed on National Stock Exchange, including Reliance Gold Exchange Traded Fund, Gold Benchmark BeEs, UTI Gold Exchange Traded Fund, Kotak Gold ETF and Quantum Gold Fund. "Five ETFs are well placed to cater to the Indian market," Burton told reporters.

He said WGC will continue to focus its energy, resources and technology to stimulate demand for gold, and jewellery and retail investment in the country. "We might launch something in future, but not in the immediate future," he said.

Speaking on the reasons for the unpopularity of gold exchange traded funds in India, Burton said not many people were aware of them.

"Moreover, they (ETFs) are not accessible products. Less than 5 per cent of Indian households invest in gold ETFs due to certain deterrents, one being PAN card."

Some mutual fund officials are of the view that although deeper penetration of mutual funds in the country, especially into rural areas, is required and encouraged, stipulations such as requirement of PAN card and KYC (Know-Your-Customer) norms defeat that purpose.

Burton attributed the current volatility in bullion prices to a drop in the dollar's value and its consequent impact on consumer behaviour.

"Sub-prime problem has created a lot of uncertainty," he said.

However, the council notes investment demand is likely to remain robust in the early part of this year, as long as the current international financial and economic worries, and dollar weakness continue.

Burton also said growing investor awareness of the long-term benefits that a small strategic allocation can bring to a balanced portfolio should also contribute to rising investment demand.