U.S. Investment Bank, Goldman Sachs, who administrates India’s largest gold exchange traded fund (ETF), has confirmed the fund no longer needs to be 100% physically backed by gold.

Last month the bank wrote to all investors confirming the risk profile of the fund had changed.

“A situation could arise where the issuer is unable to return the principal physical gold to GS Gold BeES (their scheme) upon maturity or in case of an early redemption. Such inability to return physical gold could arise on account of liquidity problems or general financial health of the issuer,” said the correspondence.

Chief Executive of fund tracker Value Research, Dhirendra Kumar, said the structure of the fund had now changed and when a fund lends their gold to another institution the complexity of the fund increases.