Motilal Oswal Mutual Fund, which launched its Gold based ETF on recently, will allow investors to take physical delivery in minimum 10 gm bars, a first for Indian markets.
Though a dozen Gold ETFs have been launched so far since 2007, they allow only market participants to take delivery of physical gold, and that too at minimum 1 kg, valued at about Rs. 28 lakh at present prices.
Motilal Oswal MOSt Shares Gold ETF.!
The Motilal Oswal MOSt Shares Gold ETF is an open ended ETF that invests in bullion.
Mr. Nitin Rakesh, CEO, Motilal Oswal Asset Management said, “The redemption of the units in minimum 10 gm gold bars will be done in association with RSBL (RiddiSiddhi Bullions), acting as primary authorised participants and market makers. This is a unique offering as it offers the best of both worlds – investment - cum consumption – in a very cost-effective manner”
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The delivery of the physical gold will take T + 5 days where ‘T’ is the transaction day. The redemption of the same gold ETF in cash on
exchanges for investor will take T + 2 days. The physical delivery facility will be available across 22 major cities in India. When you want to redeem units, you will have to approach the fund house, furnish your PAN card details and another identity proof such as driver's licence or voter's ID.
By taking physical delivery of gold bars, investors will be able to buy pure gold much cheaper than available in coins and bar form with banks and jewellers who charge a premium of 5 to 17% above the imported gold price.
Mr. Prithviraj Kothari, MD, RSBL said, “RSBL & Motilal Oswal has tried to meet the needs of all Indians wanting to have gold in their portfolio, whether as an investment or physically. This product has everything for a consumer – effective pricing, assurance in purity and weight of LBMA (London Bullion Market Association) listed refiner bars and tax efficiency.”
Units of the MOSt Gold Shares will be listed on the NSE & BSE. Investors can buy or sell the units through their trading accounts with their brokers or sub-brokers at the price quoted on stock exchanges.
NFO...!
The New Fund Offer (NFO) will be open for subscription from March 2 till March 16, 2012. The minimum investment amount during the NFO is Rs. 10,000.
The expense ratio would be up to 1.3%
The yellow metal returned 35.59 per cent in the last one year.
Taxation
As for taxation, there will be none on redemption in the physical format. But if you sell the gold within 3 years, you will be levied a short term capital gains tax in which the gains will be added to income and taxed according to your slab (10% to 30%). And, if it is sold after 3 years, you can index the cost and long-term capital gains tax of 20%. However, if you use it as any other Gold ETF, the tax will be similar to debt instruments.
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