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What are gold ETF?

Is gold ETF a good way to invest in gold?

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3 Approved Answers

Pijush Kanti Biswas

Gold ETF are ETFs which make direct investments in Gold. To make desired return Gold ETF, fund manager looks for daily gold prices and trade in physical gold.

Characteristics of gold ETF:

  • Investment takes place electronically, so you can invest in gold without holding them physically.
  • These funds are listed and traded on a stock exchange like common stocks. So, can be bought and sold at any time of the day, just have to open a Demat account for trading.
  • 1 unit of gold ETF is equal to 1 gram of physical gold.
  • Liquidity of ETF is very high.
  • charge lower fees i.e., no commission need for distributor or fund manager.
  • Investors can place different types of order for buying ETFs like stop-loss order, buy on margin etc, as they are traded like stocks in market.

So, based on your personal investment style, strategy and goals, include them in your investment portfolio. ETF is a good way to invest in gold provided you have a good knowledge of hoe ETFs work and sound knowledge of market dynamics. However, if you think you lack skill to invest in gold ETFs yourself, then Gold Savings Funds are better way to invest in gold.

Few examples of Gold ETF are:

Happy Investing!

Tanya

A gold ETF is an exchange traded fund that invests primarily in gold. Gold ETFs are units representing physical gold which may be in the form of paper or dematerialised.

One unit of gold ETF is equal to gram of gold. These ETFs are listed and traded on NSE and BSE like a stock of a company. Investing in gold ETFs is in many ways better than physical gold.

Some advantages of ETFs are:

  • Hedge against inflation
  • Inexpensive
  • Easy transactions
  • Secure investment
  • Diversifaction

Kavita Soni

Gold ETF (Exchange Traded Fund) is the type of fund provided by major mutual fund houses. Through this fund, we can buy or sell gold in the same way as we buy a stock or share.

One can buy or invest in gold in four ways: 1) Sovereign gold bonds 2) Gold ETF 3) Gold Funds 4) Physical gold

Sovereign gold bonds are the bonds issued by government every 2-3 months. Gold funds help you invest in gold using gold ETF as an intermediary and are provided by mutual funds.

Any change in gold prices will affect all these four options. If we talk about capital appreciation, sovereign bonds provide an extra interest of 2.5% over the capital interest while the other options do not have such facility.

In terms of purity, sovereign gold bonds come with 0.999 purity, gold ETF and gold funds come with 0.995 purity level while the purity of physical gold is one such thing that we cannot be sure about.

Gold ETF can be bought using demat account, gold funds can be bought via a mutual fund scheme while sovereign gold bonds can be bought through a bank or a demat account.

None of the four options but gold funds provide SIP benefits. The biggest advantage of gold ETF or gold funds lies in the fact that they provide higher liquidity to investors.

Sovereign gold bonds and gold funds charge an exit load at the time of redemption while gold ETF do not charge any exit load.

So based on above comparison, we arrive at the fact that gold ETF and gold funds are better avenues of investment as compared to sovereign gold bonds or physical gold which carry higher charges and come with an exit load and a set of risks as well.

To know more benefits of gold ETF and gold funds, please read our quick reviews on funds attached as a part of this answer.

Happy investing!




Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing.
Past performance is not indicative of future returns. Please consider your specific investment requirements, risk tolerance, investment goal, time frame, risk and reward balance and the cost associated with the investment before choosing a fund, or designing a portfolio that suits your needs.
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