Gold BeES

Gold Exchange Traded Fund

Gold BeES

Exchange Traded Fund (ETF)

ETF is an open ended fund which is traded on exchange First ETF was introduced in US during 1993 Since than it has been growing at more 60% per annum.

Gold BeES

ETF Advantages
Real Time trading v/s end of the day prices Easy availability through stock exchanges Long term share holders do not subsidize transaction cost of short term traders Low cost Available in lower denomination Convenient for long term holding

Gold BeES

Growth of ETFs
Growth of International ETFs
600 400 200 AUM $ Billion
No. Of ETF 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Jun700 600 500 400 300 200 100 0

1
3

1
3

2
4

5
21

8
21

18
31

40
33

74 105 142 212 310 417 487

92 202 280 282 336 453 596

AUM $ Billion

No. Of ETF

Gold BeES

Growth of ETFs in India

Growth of ETFs in India
R s. C ro re s
2000 1000 0
Assets
No of ETF

Dec-02 Dec-03 Mar-04 Mar-05 Mar-06 Jul-06

8 6 4 2 0

Assets
No of ETF

7
1

206
5

333
6

611
6

868
6

1200
6

Gold BeES

Time line for Gold ETFs

May 02 Mar 03 Dec 03 Nov 04 Nov 04 Jan 05 Nov 05 Mar 06 Aug 06 Awaited Benchmark Files OD for the first ETF in the world with SEBI Gold Bullion Security launched in Australia Gold bullion Security launched on LSE Street Tracks Gold ETF launched on NYSE New Gold Bullion Debentures listed in SA I shares Comex Gold Trust on NYSE Lyxor Gold Bullion Security listed on Euro next ZKB Gold ETF listed in Switzerland Additional Listing of Street tracks in Mexico ETF introduced in India

Gold BeES

Current Size of Gold ETFs

Name of Gold ETF Gold Bullion Security Australia Lyxor Gold bullion Security launched on LSE Street Tracks Gold ETF launched on NYSE New Gold Bullion Debentures listed in SA I shares Comex Gold Trust on NYSE ZKB Gold ETF listed in Switzerland AUM in tonnes 9.78 78.19 390.52 9.89 43.13 1.53

Gold BeES

Why Gold BeES

India is the World's largest gold consumer
Higher investment consumption of gold in India Social compulsion of saving in gold for many Indians Potential hedge against rupee devaluation

Gold BeES

Current Scenario
Gold is acquired and stored in the form of Jewelry, Bars, Coins, Gold Deposits, Gold Accumulation Plan and now Warehouse Receipts GAP, GDS and WRs can be classified as non physical Out of this GAP is in unorganized sector, GDS in current for is very restrictive and WR is having higher denomination

Gold BeES

Current Scenario
There is need for an instrument which has

Small denomination Cost efficiency Convenience for long term holding Greater uniform availability Liquidity

Gold BeES Can fulfill this

Gold BeES

Target Market
Gold BeES will be targeted
savers and it is intended work more like very flexible Gold Accumulation plan investors who would like to use gold as portfolio diversification and long term store of value

Gold BeES

Gold BeES Structure

Gold BeES will invest in physical gold One unit will represent one gram of gold (approx Rs. 950)

Gold BeES

Gold BeES Structure

The units will be listed on NSE and closely track actual spot gold prices Continuous arbitrage by Authorised Participants between spot gold and Gold BeES will keep prices in line

Gold BeES

Gold BeES Operations

Primary market Secondary market
Seller Cash Authorised Participant Creation in-kind (Physical Gold) Fund Buy / sell Market making / Arbitrage Redemption in-kind (Physical Gold) NSE Gold BeES

Cash Buyer

Gold BeES

Gold BeES

Advantages
Small unit size for accumulation Will remain in demat form hence no risk of theft No worries about purity of gold Established procedures for putting Gold BeES (demat security) as collateral for borrowing

Gold BeES

Advantages
Listing of one of the most popular commodity linked fund on NSE It will introduce many new investors to NSE / NSDL/CDSL who have never traded on NSE before or opened DP accounts World wide already gold ETFs are successful Gold BeES

Thank You

Gold BeES