The days of holding only physical gold in India are long gone. Although the majority of Indians still believe that physical gold is the main way to invest in gold, in the form of ornaments, bars, etc., investors are seeing the appeal of gold ETFs now. Several people do not know what a gold ETF is, but when they do, they see the benefits of investing in these Exchange Traded Funds of gold.
What are Gold ETFs?
When you open a Demat account, if you wish to invest in gold stocks, you can do so through the stock market, or ETFs (Exchange Traded Funds). You can invest in these via the route of mutual funds, and these can be purchased and sold at prices of the market. Simply put, any mutual fund that invests in gold assets is essentially an ETF of gold. As gold is a commodity, this is a fund that is commodity-oriented, and it tracks the rate of gold. Gold ETFs are traded in a similar way to stocks on stock markets, and their performance may be viewed in a way that resembles a stock’s performance.
Exchange-traded funds are representative of assets such as physical gold, in dematerialized as well as in paper form. An investor can invest in stocks as a replacement for the actual physical metal. After they are traded, investors are credited by receiving the unit’s equivalent in the form of cash in place of actual gold.
The Advantages of Gold ETFs
Today, investors want diversification in their financial portfolios with a combination of investments that guarantee potential rewards, although they may be risky, like investments in any upcoming IPO. How do you hedge risk? By buying an investment that never loses its shine and always reflects a reliable means to offer liquidity, staying stable in times of inflation. This is where gold ETFs come into the picture. Here are the key perks of investing in gold ETFs:
- They diversify your portfolio and expose you to a range of investment sectors like manufacturing, gold mining, etc.
- Gold ETFs offer safety as you don’t have to worry about the threat of physical gold theft.
- Gold ETFs avoid the tedious storage of physical gold.
- Gold ETFs are like investing in physical gold, so they act as a hedge against inflation and give you liquidity.
- Gold ETFs are easy to invest in, guarantee gold purity, and ensure transparency when you wish to liquidate them.
Top Gold ETFs in India in 2023
Gold ETFs make up funds that are “passively managed”, and they track the value of physical gold according to the market. The funds invest your capital in gold bullion which is gold of 99.5% in purity. When there is a positive movement in the gold price in the market, investors of ETFs in gold stand to earn profits. Here are some of the perfect gold ETFs to invest in 2023:
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Gold ETFs
|
Highlights |
| HDFC Gold ETF |
Expense Ratio = 0.59% |
| AUM = Rs.3353.55 Cr. |
| SBI Gold ETF |
Expense Ratio = 0.64% |
| AUM = Rs.2824.08.55 Cr. |
| ICICI Prudential Gold ETF |
Expense Ratio = 0.5% |
| AUM = Rs.3332.52 Cr. |
| Kotak Gold ETF |
Expense Ratio = 0.55% |
| AUM = Rs.2580.36 Cr. |
| Axis Gold ETF |
Expense Ratio = 0.53% |
| AUM = Rs.756.85 Cr. |
| IDBI Gold ETF |
Expense Ratio = 0.35% |
| AUM = Rs.94.67 Cr. |
| Invesco India Gold ETF |
Expense Ratio = 0.55% |
| AUM = Rs.89.3 Cr. |
| UTI Gold ETF |
Expense Ratio = 1.13% |
| AUM = Rs.817.90 Cr. |
| Aditya Birla Sun Life Gold ETF |
Expense Ratio = 0.54% |
| AUM = Rs.355.56 Cr. |
| Quantum Gold ETF |
Expense Ratio = 0.78% |
| AUM = Rs.154.60 Cr. |
The Investors Who Invest in Gold ETFs
Gold ETFs may be ideal investments for those investors who wish to keep a watchful eye on the prices of gold in real time. Then, there are those individuals who may not wish to invest in the physical metal commodity but wish to enhance their financial diversity with this investment. Investors gain exposure to the performance of the metal in the market and to the prices of the commodity.
Practical Investment
Investing in gold ETFs gives people a practical way to invest in the metal without having the cumbersome challenge of storage of gold. Additionally, if you open a Demat account today for equity investment, then you can think of gold ETFs to mitigate risks of volatile markets, as pure gold investment acts to hedge your risk. For the risk-averse and those who want safety in commodity investment, gold ETFs kill two birds with one stone, so to speak. Conservative investors get to invest in the purest form of gold with transparent transactions. Furthermore, the brokerage fees when you invest in ETFs are not high. Be sure to check out an upcoming IPO when you look for gold ETF investment.