Kolkata: Gold ETFs (exchange traded funds) have been regarded as a modern paperless way of trading in gold for the past few years with investment rising in the recent past. The silent withdrawal of the Sovereign Gold Bond (popularly known as SGB) ha sharpened the focus on gold ETFs. Almost all investment experts regard as a modern transparent way to profit from the appreciation the price of the metal.
Consider the December figures from AMFI (Association of Mutual Funds in India). The number of folios in gold ETFs at the end of December 2024 was 1,85,96,766 or 1.85 crore. An amount of Rs 640.16 crore flowed into gold ETFs in the last month of last year, while the net AUM in this instrument was recorded at Rs 44,595.60 crore. There are as many as 18 gold ETFs in India now. Some of the popular gold ETFs in India are UTI Gold ETF, Nippon India ETF Gold BeES, SBI Gold ETF, Kotak Gold ETF, HDFC Gold ETF. Incidentally, the Australian Securities Exchange was the first in the world to have launched gold ETF, Trading began in March 2003. Four years later, in 2007, India got its first gold ETF.
Spotlight on gold ETFs
Gold ETFs are dematerialised forms of investing in gold. These are listed on stock exchanges and investors can buy and sell units just like equity shares. However, an investor needs a demat account to invest in gold ETF, as they do to invest in stocks. Investment advisors are almost unanimous in their opinion about gold ETFs. The benefits can be listed as there is no need for safe storage as one needs like physical gold, they enjoy a high degree of liquidity and ETFs score high on transparency since they are based on the prevailing market price of the metal.
“Gold ETFs are an excellent alternative to investing in physical gold. Now that SGBs are out, the focus should be even sharper on ETF as a dematerialised way of investing to benefit from the price appreciation of gold. According to trends the price of the metal is expected to show further appreciation this year too. It’s a hassle-free, modern way of investing in gold which tracks the prices of the metal closely,” said Prasunjit Mukherjee, CEO, Plexus Management Services.
Gold funds or multi-asset allocation funds
Some experts also point at the fact that though SGBs issuances has stopped, one still has the option of accessing them through the secondary market. “But it is not necessary that one has to tap the secondary market for SGBs. If you really have to hold gold in a smart way, you can buy gold funds or if you want to be a little more defensive, you can buy multi-asset allocation funds that has gold in the portfolio,” said investment advisor Nilanjan Dey. “If you want to hold gold in the longer term, buy gold funds. Or, if you are a bit proactive, invest in gold ETFs,” he adds.
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Launched in 2015, the Sovereign Gold Bond had a brief but golden run in India. But the high costs of borrowing of this instrument has led to its suspension and sharpened the spotlight on gold ETFs (exchange traded fund), which experts regard as a modern transparent way to profit from the appreciation the price of the metal. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
