N fund

With gold prices hovering around 1200 for last couple of days, commodity analysts and market participants are eagerly watching whether it is able to sustain the up move and scale further higher highs. Is the gold over-valued at 1200? Is it still a bargain hunter’s choice? Has it reached new highs due to fundamental factors? Are the speculative forces driving the prices? Keeping aside the debate on these questions, one thing is certain that gold will continue to be a part of every investor’s portfolio as an insurance against inflation, geopolitical tensions and turbulence in the global financial markets.

This article explains some basic yet useful information about investment in gold through alternative channels such as Gold Exchange Traded Funds instead of buying physical asset.

In India, Gold Exchange Traded Fund is a relatively new concept but since the day Benchmark Mutual Fund launched the first Gold Exchange Traded Fund on 8 March 2007, six more mutual fund houses have launched Gold Exchange Traded Fund, which is a cost effective and convenient method for investing in gold through units of mutual funds. Gold ETF offers many advantages over the conventional method of buying physical gold. Investment objective of Gold Exchange Traded Funds is to generate returns that closely correspond to the returns provided by domestic price of spot gold.

At present, there are seven Gold ETF schemes available in India. Benchmark Mutual Fund was the first Mutual Fund House to have lauched Gold Exchange Traded Funds (NSE Symbol GOLDBEES) in India. Reliance (NSE Symbol RELGOLD), Kotak (NSE Symbol KOTAKGOLD), UTI (NSE Symbol GOLDSHARE), Quantum (NSE Symbol QGOLDHALF), SBI (NSE Symbol SBIGETS) and Religare (NSE Symbol RELIGAREGO) are other Mutual Fund Houses that have launched GOLD Exchange Traded Funds.

Most of the Gold ETF schemes have provided compounded annual returns of about 23% since the date of inception. The minimum investment amount varies from Rs.5000 to Rs.20,000 depending upon the Mutual Fund. If you want to know more about different features of GOLD ETF Schemes such as what the face value of each unit is, what the applicable loads and expenses are, how to invest in Gold ETF schemes, and how to buy and sell gold units on stock exchanges, you should refer the websites of AMFI or Mutual Funds.

Summing Up:

Regardless of where the gold prices are going, smart investors, global or Indian, will continue to allot a small percentage of their portfolio to yellow metal. Launching of Gold ETFs in India has made it a simple and convenient affair for the investors who want to buy gold as a hedge against inflation or as an investment asset.

The Author is a Techno-Commercial Consultant and Freelance Content Writer. Get more info on Financial Awareness Portal
Also visit Financial Training