TNN

Ahmedabad, Feb 19: At a time when equity and mutual fund investors are licking their wounds, investors of gold-backed exchange traded funds (ETFs) are laughing all the way to the banks, thanks to rising gold prices.

As the gold is resuming its secular trends, investors of gold ETFs have pocketed over 9 per cent gain in last seven days. Prices of five listed gold ETFs have gone up anywhere between 7.85 per cent to 9.84 per cent in the last seven days. The equity and mutual fund investors have witnessed an erosion of their wealth by 4.75 per cent as the benchmark equity index Sensex has tanked from 9465 points to 9015 points during the same period between February 12 and 18.

Gold prices have staged an upward journey since the last week of October 2008 as the worries over global economy deepened. If one takes into account the time frame of last four months, gold ETFs have given as high as 34 per cent return to investors.

"Wealth of gold ETFs investors has been increasing due to rising price of underlined gold in the global market. The current crisis in the global market has forced investors and large funds to shift their asset to gold for wealth preservation," said Sandesh Kirkire, chief executive officer of Kotak Mutual Fund.

Gold ETFs are passively managed mutual fund schemes under which investors can buy and sell gold on the exchange. As the gold is traded and the physical form of gold for each unit traded is backed by the custodian, investors need not worry about storage of their gold units.

The combined holding of gold by all these domestic ETFs are around five tonne and asset under management (AUM) of these funds has been rising with spurting gold prices. The combined gold holding of the world's top five ETFs has crossed 1,300 tonne.

SPDR Gold Share Fund, the world's largest ETF, has added its gold holding by 100 tonne in just a week's time. The total gold holding of SPDR now stands at 985 tonne.