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  • Gold Exchange Traded Fund (ETF)

  • What is Gold ETF?

    Gold Exchange Traded Funds or ETFs are mutual fund investments that focus on stock investments made in gold. This ensures simplicity and flexibility in the investment strategy. Like company stocks, Gold Exchange Traded Funds are also traded on the NSE (National Stock Exchange) cash market. These passive monetary instruments make investments in the gold bullion and are therefore based on the price of gold in the market. Due to this reason, there is transparency in the pricing of the stocks. Compared to physical gold investments, gold ETF investment has lower expenses due to its creation mechanism and structure.

    Benefits of Investing in Gold ETF

    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:

    • The investor can be assured that the gold is pure and there are no impurities, fraud or adulteration involved in the gold bullion investment.
    • 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.
    • The pricing of the gold stocks can be monitored in real time.
    • 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.

    What Makes Investment in Gold ETFs a Great Option?

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

    • Proof of Residence
    • PAN Card
    • Identity Proof

    NSE-listed Gold Exchange Traded Funds

    Name Issuer
    UTI GOLD Exchange Traded Fund UTI Mutual Fund
    SBI Gold Exchange Traded Scheme SBI Mutual Fund
    Religare Gold Exchange Traded Fund Religare Mutual Fund
    Reliance Gold Exchange Traded Fund Reliance Mutual Fund
    Quantum Gold Fund (an ETF) Quantum Mutual Fund
    Kotak Gold Exchange Traded Fund Kotak Mutual Fund
    IDBI Gold ETF IDBI AMC
    ICICI Prudential Gold Exchange Traded Fund ICICI Prudential Mutual Fund
    HDFC Gold Exchange Traded Fund HDFC Mutual Fund
    Goldman Sachs Gold Exchange Traded Scheme Goldman Sachs Asset Management
    Canara Robeco Gold ETF Canara Robeco MF
    Birla Sun Life Gold ETF Birla Sun Life Mutual Fund
    Axis Gold ETF Axis Mutual Fund
    Reliance ETF Nifty BeES Reliance Nippon Life Asset Management Limited
    Reliance ETF Nifty 100 Reliance Nippon Life Asset Management Limited
    Reliance ETF Bank BeES Reliance Nippon Life Asset Management Limited
    CPSE ETF Reliance Nippon Life Asset Management Limited
    Reliance ETF Dividend Opportunities Reliance Nippon Life Asset Management Limited
    Reliance ETF Consumption Reliance Nippon Life Asset Management Limited
    Reliance ETF Infra BeES Reliance Nippon Life Asset Management Limited
    Reliance ETF Junior BeES Reliance Nippon Life Asset Management Limited
    Reliance ETF PSU Bank BeES Reliance Nippon Life Asset Management Limited
    Reliance ETF Shariah BeES Reliance Nippon Life Asset Management Limited
    Reliance ETF NV20 Reliance Nippon Life Asset Management Limited
    Reliance ETF Hang Seng BeES Reliance Nippon Life Asset Management Limited
    Reliance ETF Liquid BeES Reliance Nippon Life Asset Management Limited
    Reliance ETF Long Term Gilt Reliance Nippon Life Asset Management Limited
    Reliance ETF Gold BeES Reliance Nippon Life Asset Management Limited

    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.

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