Gold Exchange Traded Fund (ETF) in India

This is a transparent mode of investment in mutual funds, which offers a successful platform for small investors to get a diversified portfolio in gold. Gold belongs to the Global Asset Class and therefore provides various benefits to the investor, which can be summed up as follows:

1. The investor can be assured that the gold is pure and there are no impurities, fraud or adulteration involved in the gold bullion investment.
2. This investment is held in an electronic form and not in the original physical form, therefore there is no fear of loss, damage or theft.
3. The pricing of the gold stocks can be monitored in real time.
4. Gold ETFs have high liquidity ratio, thus the investor can withdraw from the investment or avail funds from the same at any point of time.

How to Invest in Gold ETF

Gold ETFs are represented by 99.5% pure gold, and the prices of these ETFs can be found on the official NSE website. Considering that these ETFs are traded on the stock exchange, investors can rest assured that their investment is safe and secure. Purchasing or selling of gold ETFs can be done via brokers.

In order to make an investment in Gold Exchange Traded Funds, the investor should have a DEMAT and Trading Account with online transaction features for enabling stock trading.

Once the account is activated, the investor should choose a Gold Exchange Traded Fund scheme and place an online order through the trading portal of the mutual fund brokerage. This order will be sent to the exchange, where the purchase order is coordinated with the sale orders and executed. A confirmation will be sent to the investor once this is done.A relatively small fund management charge will be levied along with a brokerage fee when purchasing and selling gold ETFs.

Why Are Gold ETFs a Smart Investment?

1. The minimum purchase volume can be just one unit (one gram).
2. No making charge or premium will be charged thereby helping you save money in case the investment is substantial.
3. Gold prices are transparent.
4. There is guarantee on the purity of the gold, and each unit has the backing of pure physical gold.
5. Listing and trading of ETFs can be done on stock exchange.
6. They can be used as collateral when applying for loans.
7. Gold ETFs have no entry or exit load.

Fees and Charges

The expenses related to the purchase and sale of Gold Exchange Traded Funds is lower compared to the cost of purchasing, storing, selling and insuring gold in its physical form. Generally, a 0.4% commission is charged on the Gold ETF trading. A storage fee or brokerage fee will also be charged by the Asset Management Companies on an annual basis. This investment is highly tax-efficient.

Documents Required to Open a DEMAT & Trading Account

In order to start investing in Gold ETFs, the investor should have a DEMAT and Trading Account. The following documents have to be submitted in order to open the account:

1. Proof of Residence
2. PAN Card
3. Identity Proof

NSE-listed Gold Exchange Traded Funds

Disclaimer

Mutual Fund investments will be subject to market risks. Any mutual fund listed in the document does not guarantee fund performance or its underlying creditworthiness. Do read the mutual fund document thoroughly before investing. Specific investment needs and other factors have to be taken into account while designing a mutual fund portfolio.

GST rate of 18% applicable for all financial services effective July 1, 2017.