Despite being the world’s largest consumer of gold, most Indians haven’t shown much enthusiasm toward gold exchange-traded funds, writes Dow Jones Newswires.

"People are averse to the idea of going to a stock market to buy gold," says fund manager Vineet Lakhotia of UTI Asset Management of India. "Although gold is a sought-after commodity in India , ETFs haven't been popularized in the same way."

UTI is launching a new ETF this year to help capture a wider market share by enabling investors to buy small amounts of gold at a time without having to go through a broker.

Debasish Mohanty, head of retail sales for UTI, said the gold ETF slashes typical fees and red tape that are typical of “paper gold,” hopefully opening the market to lower income workers who are most likely to be attracted to the idea of holding gold.

The ETF has no upper cap and requires a minimum investment of one gram of gold a month, or about $27, for a period of one to three years.

Demand for gold ETFs in India will depend on wider economic circumstances, such as a downturn in the Indian stock market or lower interest rates, said Rajan Mehta, executive director of Benchmark Asset Management, the first such company to launch an ETF in India .

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