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Relentless March of Gold ETFs

The asset class has been the best performing class over a year

Investors who put their money in gold exchange traded funds (ETFs) have a lot to cheer about as far as returns from their investments were concerned.

ETFs made for greater returns than any other asset class over the last one year ended August 19, 2009. The returns generated were over 32 per cent and comprehensively beat all others.

The extent of the gains can be gauged from some of the performances logged by major indices. During the period, the Bombay Stock Exchange sensitive index Sensex has gone up by 1.83 per cent while the National Stock Exchange Nifty has returned 0.59 per cent.

On the other hand, the BSE Mid-cap and BSE Small-cap have registered negative returns of 5.76 per cent and 10.04 per cent respectively. While the top performing among the equity funds were the FMCG funds which gained 12.31 per cent, the diversified equity funds have gained 3.92 per cent during the same period.

It is no wonder then that over the last year gold collections by ETFs have risen by almost 24 per cent -- ETFs have underlying gold corpus of 6.19 tonnes this year as on July 31 while it was 5.01 tonnes last year.

Not only for a period of one year, gold collections by ETFs showed a positive trend over July as well. In June collections increased by around 5 per cent while the total gold collection stood at 5.93 tonnes at the end of the month.

Not only collections, even the price of gold registered an increase in July and the trend, on the whole, is still up. Gold price was Rs 14,905 per 10 gram as on August 20, 2009, registering a 0.17 per cent increase over the past one month.

The immediate prospects look good too as, with equity markets getting very volatile, investors have started allocating greater portions of their investments to gold ETFs.

Top 10 Asset Classes: 1 Year Performances
      Returns *    
Category  3 Months  6 Months  1 Year  3 Years  YTD
Gold ETF 4.56 -5.90 32.08 -- 8.70
Gilt: Medium & Long-term -1.48 -0.01 13.42 8.39 -7.87
Equity: FMCG 24.44 40.34 12.31 6.50 36.85
Debt: Short-term 1.02 3.71 11.11 8.93 4.39
Hybrid: Monthly Income 3.50 11.08 10.86 8.27 9.57
Equity: Banking 1.37 65.36 10.78 23.08 41.22
Debt: Medium-term -0.20 2.47 10.54 7.52 -0.66
Debt: Medium-term Institutional -0.58 2.81 10.23 8.16 -2.07
Debt: Short-term Institutional 1.16 3.65 9.42 7.34 4.27
Debt: Speciality 1.32 2.96 8.52 6.72 4.17
* Data as on August 19, 2009