Gold ETFs emerge as the best performers

If you are one of those who invested in gold exchange traded funds
(GETFs) a year ago, the yellow metal has not only turned out to be a great asset protector but also a solid wealth generator. GETFs have given a stellar 28% gains in the last 12 months when the other 26 fund categories — debt, equity and hybrid — have struggled to break the average 20% mark.

What's made gold ETFs more safer is that all of them have same returns (since all the ETFs are tracking the same commodity), while there is huge divergence in the other fund categories — sometimes as high as 40-50 % between the best and worst schemes.

With gold as an asset coming into limelight as the world went into a slump, ETFs tracking metal price rose in tandem as stocks fell.


The gains logged by gold ETFs come in a period when equity funds focussed on banking and FMCG have delivered around 18-19 % returns, GILT (medium and long-term ) schemes have given 13% returns , monthly income plans posted 12% gains and sensex rose 9%, data from fund tracker ValueResearch shows.

Currently there are five gold ETFs such as Gold Benchmark ETF, Kotak Gold ETF, Quantum Gold, Reliance Gold ETF and UTI Gold ETF with more than 1 year history . SBI MF launched its Gold ETF in April this year. With Chinese consumers buying gold aggressively, coupled with onset of the festive season in India, experts predict gold prices will rise further.

"For the last 15 years, dollar has depreciated while gold prices have inched up. For the record, gold has delivered 16-17 % compounded annual growth rate (CAGR) for the past 9 years. If high crude prices continue to push inflation , making gold more attractive as an inflation hedge," Amar Shah, Head of Research (Commodities), Angel Broking, said.

Gold prices in New Delhi market currently trade around Rs 15,200 per 10 grams. Investors have clearly identified gold as a part of their asset allocation strategy , feels Krishnan Sitaraman, director — Crisil FundServices . "Gold's allure lies in the fact that it has proven its mettle during down times.