GOLD MUTUAL FUNDS INDIA NFO(Exchange Traded Fund-ETF)

Slew of ETF(Exchange Traded Funds) for most precious commodity i.e Gold are being launched in the coming few months. BenchMark Funds, UTI, TATA Mutual Fund etc. all these fund houses are planning NFO launches for Gold Mutual Funds.
Primary objective for such funds would be to diversiy the investor's portfolio, hedging in a relatively safe commodity and a novel instrument for investments in India.

Gold Exchange Traded Mutual Funds would be perhaps first ever to be launched in India.

Gold Mutual Funds are intended to offer investors a means of participating in the gold bullion market without the necessity of taking physical delivery of gold, and to buy and sell that participation through the trading of a security on stock exchanges.
Gold ETF MF's are designed to provide returns that, before expenses, closely correspond to the returns provided by physical Gold.
Each unit is approximately equal to the price of 1 gram of Gold.

Advantages of investing in Gold/ Gold MF's :

GOLD
• An Excellent Diversification for Portfolio.
• Global Asset Class.
• Hedge against Inflation.
• Low Volatility as compared to Equities.
• Store of value.

GOLD ETF MF's.
• Potentially cheaper to have price exposure to gold price as compared to other available avenues
• Quick and Convenient Dealing through Demat Account
• No Storage & Security Issues for investors
• Transparent Pricing
• Taxation of Mutual Fund
• Listed and traded on stock exchanges, just like a stock-Easy Buying/Selling
• Ideal for Retail Investor as minimum lot size to trade is one unit on secondary market.
NAV of a Unit will track price of approximately 1 Gram of Gold.

Disadvantages of GOLD/ GOLD ETF MF's:
• Though ETFs are popular abroad, it is still a new concept in India.
• Lack of expertise of Domestic Funds Managers on Gold Spot/Futures and Options prices.

Although India is one of the Largest consumer/importer of this Commodity in the world, there are very few options available for an investor in this amazing commodity purely from an investing perpestive.


This innovative product shall decide the future of other exiting product launches for a huge Gold market.

Overall view : Suscribe

Time Horizon : 3 - 5 years.
Age Group profile: None.

2 comments:

MITTHU said...

Why is there a big difference between the prices of different Gold ETFs like UTI,SBI,KOTAK,etc.?I suppose all are prices for 1 gm of gold.

ONLINEMF said...

@Mitthu,

The difference in Gold Prices for different Exchange Traded Fund is due to the different launch date of funds. UTI Gold EFT, Kotak Gold ETF and SBI Gold ETF are all launched in 3 seperate years.The most recent one being SBI MF Gold ETF. So the prices of each ETF vary accordingly.