Gold ETFs are units representing physical gold, which may be in dematerialized or paper form. These units are traded on the exchange like a single stock of any company.
What is Gold Exchange Traded Fund (Gold ETF)?
In simple terms, you can say that Gold ETFs are such as MFs (mutual funds) – they collect money from many investors, and invest it on their behalf.
The difference is that MFs invest the money in shares and debt instruments, whereas Gold ETFs invest your money in physical gold.
Gold ETFs buy gold from very reliable sources on your behalf, and take care of its safekeeping. In return, they issue you units of the ETF, each unit representing roughly 1 gram of gold. These units are traded on the stock market, and can be bought like ordinary shares.
The NAV of these units fluctuates based on their demand and supply, and usually mirrors the price movement of physical Gold. The charges regarding the storage and safekeeping of physical gold purchased on your behalf are deducted from the NAV of the units.
Advantages of Gold Exchange Traded Fund (Gold ETF)
Ease
If you want to invest in gold, you just purchase the units of the ETF. The Gold ETF has done all the hard work of finding reliable sellers, buying from them, storing the gold and its safekeeping. You just sit back and relax! And if you want to sell, no need to go to the market to a jeweler - just sell the units like ordinary shares, and you’re done..!
Safety
Since gold is not physically held by you, you don’t have to worry about its safekeeping! That’s a big relief!
Small Investments
Unlike any other investment option, with Gold ETFs, you can invest in as less as 1 gram of gold. This also means that you can make regular (maybe monthly) investments in gold, just like Systematic Investment Plans (SIPs) of Mutual Funds (MFs).
Liquidity
If you want to sell physical gold, you would not have to be hassled to find the best price from local jewelers and settle for a price offered by one of them. Compared to this, Gold ETFs are traded in open markets in a transparent manner, and they have ample liquidity. This means that you get a price that is very close to the actual prevailing price of physical gold.
List of Gold ETFs available for trading in India
Axis Mutual Fund - Gold ETF AXIGOL
Birla Sun Life Mutual Fund - Gold ETF BSLGOL
Canara Robeco Mutual Fund - Gold ETF CANROB
Goldman Sachs Mutual Fund - Gold ETF GOLGOL
UTI Mutual Fund - Gold ETF UTIGOL
HDFC Mutual Fund - Gold ETF HDFGOL
IDBI Mutual Fund - Gold ETF IDBIGO
ICICI Prudential Mutual Fund - Gold ETF ICIGOL
Kotak Mutual Fund - Gold ETF KOTGOL
Motilal Oswal Mutual Fund-MOSt Shares Gold ETF MGOETF
Quantum Mutual Fund - Gold ETF QUAGOL
Reliance Mutual Fund - Gold ETF RELGOL
Religare Mutual Fund - Gold ETF RELIGO
SBI Mutual Fund - Gold ETF SBIGOL
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