SBI Mutual Fund splits its gold ETF in 1:100 ratio

India’s biggest fund house in terms of assets, SBI Asset Management Company Ltd, has announced a split in the face value of each unit of SBI - ETF Gold in a 1:100 ratio.

Following the split, each unit of the SBI - ETF Gold will trade with a face value of ₹1 with effect from 6 January 2022 instead of ₹100 at present.

The net asset value (NAV) of the SBI - ETF Gold on 4 January was ₹4,254. Hence a 1:100 split is likely to bring down the NAV to levels of around ₹42.

However, this will not have any impact on the current value of holdings of the unitholders of the scheme.

As per industry insiders, SBI Mutual Fund’s move is likely aimed at making the scheme more accessible for retail investors, which may also help increase liquidity on the stock exchange.

SBI - ETF Gold is the third biggest gold investment scheme with assets of ₹2,562 crore as of 30 November 2021.

The scheme was launched in 2009 and has delivered -4.26% return on a one-year basis, 13.77% on a three-year basis and 10.46% gains on a 5-year basis.

Investors should note that gold is the only asset class to deliver negative returns on a one-year basis.

Nippon India ETF Gold BeES is the gold scheme in India with assets of ₹6,417 crore, followed by HDFC Gold ETF at ₹2,865 crore.

Recently, another asset management company (AMC), Quantum Mutual Fund, had announced a change in the face value of Quantum Gold Fund (QGF), making it more accessible for investors. The face value of QGF was changed from ₹100 to ₹2. Accordingly, each unit approximately represented 1/100th of 1 gram of gold.