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IDBI Gold ETF - New Fund

 

Gold ETFs (exchange traded funds) have caught investors' fancy for a number of reasons. Financial planners recommend gold as an alternative asset class for your portfolio and recommend investors to hold 5-10% of their portfolio in gold. Gold is considered a safe bet by many and a hedge against inflation. It has very low correlation to other asset classes, making it a handy asset to diversify the overall portfolio.


Buying gold through the ETF route also eliminates the hassles of storing physical gold and the risks involved with it. It also addresses the issue of purity and liquidity. Hence, many investors are taking the ETF route to invest in gold. They now have another option in ETF in the form of IDBI Mutual Fund's IDBI Gold ETF. The NFO is open currently and closes on November 2.

ABOUT THE PRODUCT

IDBI Gold ETF, an open-ended fund, will invest the money collected from investors in standard gold bullion. The investment objective of the fund is to replicate the performance of gold. It will seek to achieve the investment objective by minimising tracking error. One advantage of the fund is that it can be used as security for taking loans from IDBI Bank, giving it instant liquidity. Investors' holding in the fund will be denoted in units, which will be listed on a stock exchange. The fund will be passively managed and will provide returns that would closely track the returns from physical gold in the spot market. An investor can buy the units in the NFO, and once it is listed, buy them and sell them on the NSE and the BSE where the units will be listed. IDBI MF will also offer direct buy-sell options at NAVrelated prices for investments of 1000 units and above. The expense ratio of the fund will be capped at 1.5% and the minimum amount of investment in the NFO is . 10,000.

To Invest?
Investors who wish to build up their gold portfolio and hold gold as an asset class in their portfolio could apply

Or....Not to Invest?
Since it is a new fund offer, it is impossible to ascertain how liquid the ETF will be once it is listed.
 

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