Diversified Equity schemes Outperform Gold ETFs

Looking at the three-month performance, gold ETFs (exchange traded funds) are coming up the value chain, a trend that has caught the attention of investment circles. However, diversified equity funds, in comparison, outperformed Gold ETFs. Gold ETFs, which had trailed almost all other categories of funds with sub-1% returns for the six-month period ending 12 October 2007, have sailed ahead in recent months - their three-month score turning out to 8.5%. Diversified equity funds have provided 14.55% and 35.08% over three- and six-month periods respectively.

Gold ETFs, a new-generation category spawned with the help of recent regulatory sanction, have remained a small group, with only three products making it to the list. These are managed by UTI, Benchmark and Kotak. UTI's Gold ETF and Gold Benchmark ETF have provided 8.58% and 8.54% respectively during the three-months ended 12 October 2007. The Kotak fund, which was launched in July, has given about 2.85% in the past one month or so. The market has not taken aggressively to gold ETFs, investment circles suggest, while referring to their relatively small asset sizes. This, they feel, indicates that there have not been too many takers compared to that of certain other categories. The UTI scheme, for the record, had about Rs 143 crore under management in September, the benchmark fund Rs 128 crore and Kotak Rs 52 crore. That gold ETFs are increasing in number is clear from recent filings by fund houses. The latest to do is Quantum MF - the proposed Quantum Gold Fund will be listed on the stock exchange in the form of an ETF tracking domestic prices of gold through investments in physical gold.