Gold Exchange-traded funds have received a lukewarm response from investors. A gold ETF is an open-ended mutual fund scheme where money raised is used to buy gold instead of stocks. The gold ETF is then listed on bourses and the units are traded like shares.

Benchmark Mutual Fund could collect only Rs 100 crore, while UTI Mutual Fund managed to mop up only Rs 150 crore.

The listing of these funds on bourses was not encouraging either. Benchmark Mutual Fund’s Gold BeES listed on the National Stock Exchange last month at Rs 1,000.30 a unit. The unit price initially moved up to Rs 1,104, but fell to Rs 947 within an hour. It closed at Rs 947.80, a marginal rise of Rs 2.10 over the allotment price of Rs 945.70. Total traded volume was Rs 6.31 crore.

The closing price of Gold BeES on the NSE on March 20 for 10 gm approximately was Rs 9,478, but the domestic price of gold quoted at Rs 9,325 per 10 gm.

At the end of the first week of listing, the exchange-traded fund’s value on the exchange was Rs 9,471.8, while the domestic price was Rs 9,385.

UTI Mutual Fund’s Goldshare debuted on NSE last week at Rs 950. The fund traded at an intra-day high at Rs 1,000 and saw a low of Rs 938.10.

UTI AMC and Benchmark AMC’s gold exchange-traded funds have also listed on the stock exchange, while Reliance, Kotak, Escorts and Birla Mutual Fund have filed their offer documents with Sebi for gold exchange-traded funds.

“Ordinary investors can save and invest in gold ETFs with a minimum amount of Rs 1,000 — roughly equivalent to the price of one gram gold. The primary aim of gold ETFs is to track the price of gold in the market,” said A.P. Kurian, chairman of the Association of Mutual Funds in India.

Gold ETFs are a big success in the US, South Africa and Australia. In India too, these funds are expected to attract a good amount of retail participation.

“Gold ETFs worldwide have met with success after they were listed and traded on exchanges,” said A.K. Sridhar, chief investment officer of UTI Mutual Fund.

A number of other fund houses have lined up their plans to launch gold ETFs. These include Reliance MF, ICICI Prudential Mutual Fund, Birla and Kotak Mutual Fund.