Gold ETFs mushroom in India

Gold exchange-traded funds (ETFs) may be new for India, but are gaining in popularity as investors become aware of the benefits of investing in gold paper as opposed to holding it as jewellery.

ETFs are instruments that trade like shares and are backed by physical holdings of the commodity.

India is the world's top consumer of gold, accounting for 20% of global demand. In a country where many of the 1.2 billion population live far from a bank, Indians traditionally invest in gold jewellery.

Here are some key facts and figures on India's gold ETFs:

- India has eight gold ETFs currently listed with a total collection of more than 15 tonnes, up 57% on a year ago.

- India's gold ETF collection is small compared to its approximately 700 tonnes of annual gold consumption. But industry players suggest it could rise by at least 50% year-on-year.

- Mumbai-based Benchmark Mutual Fund, owned by Goldman Sachs Asset Management, was the first to start a gold ETF in 2007 and has the largest collection of more than eight tonnes.

- The ETFs are listed on India's National Stock Exchange and Bombay Stock Exchange and most of them have a minimum individual share size of one gram.

- HDFC Mutual Fund is the latest to offer a gold ETF, which started trading last week. ICICI Prudential, which has already collected funds, will list its ETF soon.

- Gold funds have been witnessing explosive growth due to the convenience of buying paper gold, which can be acquired online, and the guarantee of quality, that is absent in jewellery, officials managing the ETFs say.