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The new fund offer (NFO) opened for subscription yesterday and closes on November 2. The allotment of units will take place on November 10. The minimum application amount for the NFO is Rs 10,000 and in multiples of Re 1 thereafter.
The fund, the first gold offering by the IDBI Group, will invest in physical gold and track gold prices. The benchmark for the fund would be the domestic price of gold, IDBI Mutual Fund said.
"Our view is that gold is an essential part of asset allocation for an investor and it is an evergreen asset," IDBI Asset Management Ltd Managing Director and Chief Executive Debasish Mallick told reporters here.
An ETF is like a mutual fund but is traded like a stock on an exchange. ETFs experience price changes throughout the day as they are bought and sold.
"IDBI gold ETF units are proposed to be listed on the NSE and BSE to impart liquidity. Reputed bullion dealers have been appointed as market-makers to provide buy-sell quotes in the markets on a regular basis. IDBI MF will also offer direct buy-sell options at NAV-related prices for investments of 1,000 units and above," Mallick said.
The gold ETF will be sold through most of IDBI Bank's branches, 400-450 branches of IDBI Capital Market Services, 250 branches of Stock Holding Corporation of India and some branches of Federal Bank and Corporation Bank, he added.
"A unique feature of IDBI Gold ETF is that it can be used as security for taking loans from IDBI Bank, giving it instant liquidity... We are also in talks with five of the biggest jewellers in the country, who will sell gold jewellery in exchange of the ETFs, giving investors instant funds," he said.
He, however, did not disclose the amount the company aims to garner from the fund
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