Traditionally, Indians have always had an affinity towards gold. Investors looking to invest in gold can do so via ETFs or more specifically Gold ETFs. A Gold ETF (Exchange Traded Fund) is an instrument that is based on gold price or invests in gold bullion. It is traded on major stock exchanges and Gold ETFs track the gold bullion performance. When the gold price moves up, the value of the exchange-traded fund also rises and when the gold price goes down, the ETF loses its value.
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In India, Gold BeES ETF was the first listed exchange traded fund, thereafter other gold ETFs came into existence. There are Mutual Funds that also allow investors to take exposure to exchange-traded funds in gold.
Investors can buy the gold ETFs online and keep it in their Demat account. An investor can purchase and sell gold ETFs on the stock exchange. Gold ETFs are units in lieu of physical gold, which may be in dematerialised form or paper form. One gold ETF unit is equal to one gram of gold and is backed by physical gold of very high purity.
Gold ETFs allow investors to participate in the gold Market at ease and also offer transparency, cost-Efficiency and a secure way to access the gold market. They also provide the benefit of liquidity as it can be traded at any time during the trading period. The first gold ETF in India was launched in 2007, and since then, their popularity amongst Indian investors has grown immensely.
One of the major advantages of the gold ETFs is ‘safety’. As it’s bought and sold electronically, investors can track their movement anytime they want to, by just logging into their broking account. This also gives a high level of transparency.
In gold ETFs, an investor can invest even a small amount of money. With one share equal to one gram of gold, one can make purchases in small quantities. Small investors can buy and accumulate gold by making small investments over a period of time.
Gold ETFs are backed by gold of the highest purity.
Compared to physical gold, the gold ETF has a lower price, as there are no premium or making charges.
Gold ETFs are listed and traded on the stock exchange.
Some of the disadvantages of Investing in Gold ETFs are:
Investing in a gold ETF is fairly easy. All you need to have is a demat account and an online Trading Account. To open an account, you need to have a PAN Card, an Identity Proof and an Address Proof. After the account is ready, one has to choose a gold ETF and place an order. Once the trade is executed a confirmation is sent to the investor. Also, a small fee from the broker and the fund house is charged to the investor when one buys or sells these gold ETFs. You can also invest in Mutual Funds that have an Underlying gold ETF via brokers, distributors or IFAs.
Investing in Gold via ETFs is considered to be one of the best ways to invest in gold. If you are planning to Invest, one should choose the underlying Best Gold ETFs to invest in by carefully looking at the performance of all the gold ETFs and then make a well-thought decision.
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 5 YR (%) 2022 (%) Invesco India Gold Fund Growth ₹16.6538
₹56 10.8 10.2 15.4 10 12 12.8 Aditya Birla Sun Life Gold Fund Growth ₹17.1618
₹271 12.5 11.3 15.2 11 12 12.3 SBI Gold Fund Growth ₹17.2512
₹1,242 11.9 11.5 16.7 10.6 12.1 12.6 Nippon India Gold Savings Fund Growth ₹22.7167
₹1,431 12.1 11.8 16.2 10.4 11.8 12.3 ICICI Prudential Regular Gold Savings Fund Growth ₹18.3174
₹648 11.2 11.8 16.7 10.6 11.9 12.7 Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 27 Jan 23
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Indians have traditionally had an affinity towards investing in gold. Households and housewives have always looked at gold as an asset, which accumulates wealth over time. With the advent of gold ETF, it has now become even easier; no premiums, no making charges and best of all no worries on purity make it the preferred route to Buy Gold as an investment!
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