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India's Mirae Asset Mutual Fund aims to launch its first precious commodities-linked exchange traded fund (ETF) by the end of first quarter of 2023, the company's head of passive investment products said on Friday.

Mirae Asset Investment Managers India has applied to the Indian markets regulator, the Securities and Exchange Board of India, for the launch of gold and silver ETFs as well as a gold plus silver asset allocation product, Siddharth Srivastava, head of ETF Products, told Reuters in an interview.

"(Gold ETF) is a good product that one can use in asset allocation. Indians have a very special place for gold from an investment point of view," Srivastava said, adding that it will take some time before silver gains traction.

Mirae Asset Mutual Fund managed assets of more than 1.16 trillion rupees ($14.03 billion) as on Nov. 30.

Exchange traded funds back each security issued with physical stocks of a given commodity, creating a product considered free from counterparty risk.

Investors in India, the world's second-biggest gold consumer, fancy buying physical gold, while pumping money mostly in equity-linked ETFs and index funds.

ETFs can easily be traded in small quantities and have some advantages like low expense ratio, which is why a lot of investors are comfortable and the segment continues to grow, Srivastava said.

Net inflows into gold ETFs stood at 7.30 billion rupees through the end of November this year, according to data from the Association of Mutual Funds in India. Nippon India, HDFC Mutual Fund and State Bank of India are some of the financial companies that offer gold ETF products in India.

Holdings of the world's largest gold-backed exchange-traded-fund (ETF) - New York's SPDR Gold Trust GLD - are down over 6% so far this year, in line with subdued performance of spot gold, which is down nearly 3%.

However, Srivastava said there is strong investment appetite for gold ETFs.

($1 = 82.6930 Indian rupees)