What is Gold ETF – Gold Bees, Reliance Gold,Kotak Gold

 What is Gold Bees or Gold ETF?

Gold ETFs are open-ended mutual fund schemes that will invest the money collected from investors in standard gold bullion (0.995 purity). The investors’ holding will be denoted in units, which will be listed on a stock exchange.They provide returns that would closely track the returns from physical gold in the spot market.

An investor can buy and redeem the units either directly from the mutual fund or from the stock exchange.Presently there are many Gold ETFs traded in NSE India. Some of the listed Gold ETFs are GoldBees, Reliance Gold, Kotak Gold, UTI Goldshare

gold bees etf

Why choose Gold?

Gold holds its own in any investment evaluation on its strengths as a hedge against inflation, value in the event of political uncertainties and its traditionally negative co-relation with other asset classes such as stocks, fixed income securities and commodities.

The value of goods and services that gold can buy has remained stable unlike currencies that have seen significant fluctuation. A study spanning a 400-year period has shown that the basket of goods and services that gold could buy over the period has remained the same.

What returns can you expect?

The 35 per cent return that gold has delivered in the last one year and 170 per cent absolute return in the last five years is not par for the course. In the period 1970-1982, gold prices had a compounded annual growth rate (CAGR) of around 21 per cent while inflation grew by 14.1 per cent over the same period. But in the following 23 years, inflation grew by 7.6 per cent while gold prices grew by 7.78 per cent.

Why Gold ETFs?

There are enough reasons why gold should be included in any investor’s portfolio.Investing in gold ETFs will give the investor all the advantages of investing in gold while eliminating drawbacks of physical gold – cost of storage, liquidity and purity, among others.

Gold ETFs allow investment in gold in small denominations, which makes it easier for the retail investor to participate. On the secondary market, the minimum lot is one unit. This enables the investor to accumulate units over time and reap the benefits of rupee cost averaging. The units can be redeemed either from the fund directly or from the market.

How can I invest in Gold ETFs?

Just like you invest in shares. You will need to have a demat account. These Gold ETFs are listed in NSE and the daily movement in their prices can be checked online like the way you keep track of your equity portfolio.

The following picture would clarify about different options available gold investing. The picture clearly shows investing in Gold ETF is better than other options.

goldbees-masterandstudent

Go for gold !

Update: For more details and live Gold Bees Price read this post Goldman Sachs Gold Bees
 

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50 Comments on “What is Gold ETF – Gold Bees, Reliance Gold,Kotak Gold”

  1. Even Quantum Gold ETF is one of the better funds available to buy gold amongst the other Gold ETFs. It is also listed on NSE. It is better because it has given better returns relative to other funds replicating gold prices the closest. It has very minimal tracking error.

  2. Hw is reliance gold etf
    Shall i start an sip in it or should i go with a lump sum investment.
    I currently have 20 K.
    Plz suggest how much should i invest if i go wid lump sum investment

  3. @ Reg reliance gold etf, you could start an sip, instead of lump sum investment.
    Also , limit your exposure to gold ETFs to 10% of your portfolio.
    If you have any other queries, pl post them or use the contact form.

  4. @nitish,
    It is advisable to invest for short term like 25-30 days. Having said that, gold is heading higher, and one could invest 10% of one's portfolio.

  5. @structural engineering,

    You can invest either in Gold , but limit your exposure to 10% of your total portfolio. You can invest in Gold Bees or HDFC gold Etf, there is not much difference.
    When gold goes up or down by 100rs, the price of the above funds go up/down by similar amount.

    Pl use the contact form, if you need further clarification.

  6. No, gold Etf cannot be redeemed into physical gold.
    But, one could just sell the units any point of time and purchase gold/jewel. The price difference won't be much.

  7. IF AN GOLDBEES ETF OR ANY OTHER ETF GETS SHORTED . THAN WHAT WILL HAPPEN . CAN I GIVE DELIVERY OF OTHER ETF KEPT IN MY DP.

  8. Is it right time to invest in gold ETF.
    Which is best and less tracking error (Gold Beas, Rel HDFC, any other)
    what is right portfolio distribution.pl tell each

  9. One can wait to invest in Gold funds. 10-15% correction possible from these levels, though one cannot time it. Invest only 10% of your total portfolio. HDFC gold and Gold bees are better of the lot.

  10. My broker advice me to buy 100 gms gold bees.He says that then i can use it for comoddity market trading.He suggest me to buy or sell same quantity in comodity market.Is this safe for me.

  11. Hi Mehul,
    The gold ETF comprises of Gold 995 (Fineness) and its NAV varies slightly due the variation in pure gold price and the cash component in the fund. Hence the difference in the spot price and the NAV.

  12. Hello.. I dont know anything about gold ETF or stock markets DMAT acc… I want to buy gold. Is it ok to buy gold or invest in gold etfs… As I want to buy gold only for savings purpose… so please guide me…

  13. I want to buy gold for my sisters marriage scheduled after 5 months, in share market rate of goldman sachs is 2384/-, whereas in real market gold is 26000/per tola. Should I purchase goldman's 20 shares, can it be changed into gold, if no please tell.me other better option to buy gold from share market

  14. @gita devi pandey,
    yes, goldman sachs gold bees is 2384(friday price) and today's rate is 2442. The 26000/tola is today's rate.

    Yes there is difference in gold bees and market price. You can purchase gold bees 20 shares. After 5 months it cannot be changed to gold but you can sell it and with that cash you can buy gold.
    suppose after 5 months if it is 25000(10 shares), the market rate would be around 27500 per tola( the difference would be maintained). On the other hand after 5 months if it is 23000, the market rate would 24500.

    You have to pay the extra amount. The higher price is fixed by the jewellers and we cannot avoid that.suggestion would be to buy 22 shares to make up the difference. you can buy 5/10 shares as per your convenience.

  15. Hello Rajesh. I have an SIP in Gold – Reliance Gold fund for the past year. Now my investment manager is telling me to stop it as it has started going in negative. They have suggested shifting to a new Reliance Fund and restarting the SIP in SBI fund. Please advise. Also which is better at this time – Gold mutual fund or Gold EFTs ? Thanks.

  16. Hello,
    Returns of SIP in Gold – Reliance Gold fund for the past year(2013) is about 9%.Gold is turning negative in dollar terms for the first time in 30 years, but Indian gold price is still holding. You may redeem the amount, since you are in profit. (check here for last year's SIP return – http://goo.gl/CfxiuG )

    If you still want to invest/continue to invest in gold, gold mutual funds are better since you can invest fixed amount (say 5k) which is not possible in Gold ETFs( where you have to buy 1 or more units). Also there is not much benefit in switching from one fund to another fund.

  17. I liked this all i am also interested investing into gold and silver. i wanna invest 1 lac how to invest and where to invest.
    pls suggest me. investment is very important for me this time.

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