Mumbai, Feb 9 (IANS) Reliance Mutual Fund, a part of Reliance Capital Ltd, Wednesday launched a gold savings fund that enables investment in the precious metal in paper form without the investor needing to hold a demat account.

This is unlike the existing gold investments in Exchange Traded Fund (ETF) mode where a demat account is mandatory, the Reliance Capital subsidiary, part of the Anil Dhirubhai Ambani Group, said in a statement.

The company said Indians' love for gold as an asset and low demat penetration in the country made the fund an ideal investment avenue and investments in such gold funds would overtake equity mutual funds in three years.

"We firmly believe that the gold investment opportunity in India is not optimally tapped," said Sundeep Sikka, chief executive, Reliance Capital Asset Management.

"We expect this gold investment industry to surpass the equity mutual funds in the next three years and are convinced that this product will offer a simple, affordable and investor friendly solution for investing in gold to the masses," added Sikka.

The fund allows small regular investments of as low as Rs.100 per month and in multiples of Re.1 thereafter.

Also, investment in the fund will provide the investor long-term taxation benefits from first year, unlike physical gold wherein long-term taxation concession can be availed only after three years.

There is no entry load for the scheme, as per the regulator's guidelines. The exit load is 2 percent, if the investor redeems or switches out on or before completion of first year from the date of allotment of units.

The offer for the funds opens Feb 14 and closes on Feb 28.