Gold ETF's

Gold ETF tracks the performance of Gold Bullion. Gold ETFs 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. But, there are Gold ETFs which also provide a unit which is approximately equal to the price of ½ gram of Gold.

What is Gold ETF's?

Gold ETFs provided 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 exchange. Gold ETF would be a passive investment; so, when gold prices move up, the ETF appreciates and when gold prices move down, the ETF loses value.

Why you need to invest in Gold ETF's
Maintain Living Standards

Purity & Price

There is no worry about ensuring gold purity as these funds are represented by 99.5% pure gold. Gold ETF prices are listed on the NSE website and can be bought or sold anytime through the broker. It is important to note that unlike jewellery, gold ETF can be bought and sold at the same price Pan-India.

Low on Price

Hedge against Inflation

Gold is considered a safe investment because it can be used as a protection against currency fluctuation and inflation.

Rider Benefits

Simple Trading

You need to buy a minimum of 1 unit of gold – equal to 1 gram of gold – to start trading in gold ETFs. Buying and selling the units works just like equities – you can trade through your stockbroker or ETF fund manager.

Tax Benefits

Open Trading

Gold prices on the stock exchange are publicly available. You can check the gold prices for the day or the hour without any confusion.

Types of Gold ETF:

• Index ETF: Most of the ETFs available today are index ETFs. This type of ETF tracks the performance of the index. This is done by including wither the contents of the index or having a sample of securities that make up the index. The two types of Index funds are “replication” and “representative” ETFs. Index ETFs that invest entirely in the securities underlying the index make up the replication ETF and those that invest most of the fund in representative samples and the remaining in other holdings (e.g. futures, options, etc).

• Commodity ETFs or ETCs: Commodity ETFs, as the name suggests, invest in commodities, such as gold, silver, other precious metals. Infact the first ever commodity ETFs were gold exchange traded funds. But commodity ETFs are index funds that track the non-security indices. Initially the commodities ETFs actually had the physical commodity itself. Now-a-days they have implemented the futures trading strategy.

• Accidental dismemberment: It indicates that a part of the policyholder's body has been severed or dismembered. It means, if the policyholder loses his hand or leg or eyes in a mishap, then he would be eligible to get a claim under dismemberment.

• Bond ETFs: Exchange traded funds that generally invest in bonds are called Bond ETFs. When the stock markets go through an economic recession, the bond EFTs is in demand. Unless brought and sold by a third party, the bond ETFs can give reasonable yields.

Factors of Choosing the Right ETF Scheme:

Assets under Management(AUM)

AUM is defined as the market value of all the financial assets that a company manages for its investors. If a company has a high AUM value, it reflects on the high number of clients and portfolios that it handles.

Net Asset Value (NAV)

NAV is the value of the company’s assets except the value of its liabilities. It is also the ETF’s per-share value. NAV is arrived at by dividing the total value of all the securities in a firm’s portfolio, except the liabilities, by the number of outstanding fund shares.

Returns

The profits or income made by an ETF scheme or portfolio is known as return.

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