Skip to main content

ETFs Score over Buying Physical Gold

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

 

 

Exchange traded funds offer all advantages of GOLD at a lower cost



Akshaya Tritiya is just a few days away and along with jewellers, gold traders and gold buyers, even investors are gearing up to buy some amount of the precious metal on the auspicious day. The significance of buying or investing in gold on this day comes from the belief that anything bought on this day remains forever. This belief comes from the meaning of Akshaya, a Sanskrit word for something that never diminishes.


In India, on this day, people usually buy gold leafs, coins, biscuits and bricks. In addition, thanks to innovation by two Indians about a decade ago, a relatively new way of buying gold has emerged: exchange-traded funds (
ETFs) for gold. And the good news is that gold ETFs, which come with several advantages over buying physical gold, is gaining popularity. Through innovative financial engineering, gold ETF combines the popularity of gold buying without holding it in physical form, making it possible to be traded on the bourses like stocks, and still giving investors to realize nearly the full value of physical gold.


Working of gold ETFs


In India, a mutual fund house is allowed to introduce (sell) gold ETFs to investors. The mutual fund approaches an authorized bank to arrange for some physical gold. It then approaches Sebi with a prospectus to mobilize funds from prospective investors. Once the prospectus is approved by the regulator, the fund collects money from investors and gives the investors ETF units equivalent to the amount invested by the investor. Each ETF unit could be equal to a fixed amount of gold, say one gram, 10 grams or so, or a particular value, say Rs 100, Rs 1,000 or something.


Once the offer closes, and the ETFs are listed on a bourse, investors holding gold ETFs units can buy and sell those units on the exchange, which is like trading in shares. The fund house, on its part, is responsible for ensuring the quality of gold it is holding with the bank against the money it mobilized from investors and also buys insurance for the physical gold held by the custodian bank. The custodian, on the other hand, is responsible for the safe keeping of the gold that is in its custody.


Looking at the popularity of trading in gold ETFs, every year on Akshaya Tritiya exchanges extend trading hours for only for gold ETFs, usually till 8 pm in the evening while the regular trading for shares closes at 4 pm.


The popularity of gold ETFs could be attributed to several of its advantages over holding physical gold. These advantages include high level of affordability, no risks of theft, lower costs of holding, high liquidity and nearly no discounts to market price of physical gold while selling and several others.


A new innovation in the gold investment space through the mutual fund route has been the gold fund of funds (
FoF) route. This has been introduced in the market mainly to tap those investors without a demat account but still willing to invest in gold ETFs. Under this type of investing, mutual funds mobilize money from investors, and then invest the same in gold ETFs, either in the ETF floated by the same fund house or floated by different fund houses.

Gold FoFs have some advantages and some disadvantages as well. Among the advantages is the ease of investing, that is you can invest in gold ETFs without a demat account. Of the major disadvantages are higher costs, which could be as high as 1.50% compared to about 0.75-1% for direct investments in gold ETFs. Another disadvantage is the double tracking error: First for gold ETFs in which a the FoF invests, and then its own tracking error.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax Plan Invest Online
  2. HDFC TaxSaver Invest Online
  3. DSP BlackRock Tax Saver Fund Invest Online
  4. Reliance Tax Saver (ELSS) Fund Invest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) Fund Invest Online
  7. SBI Magnum Tax Gain Scheme 1993 Invest Online
  8. Sundaram Tax Saver Invest Online
  9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFunds Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

Popular posts from this blog

What is Electronic Clearing Service (ECS)?

  As the name suggests, it's an electronic process through which money can be transferred from one bank account to another. According to RBI, this mode is usually used for regular payments and receipts, like distribution of dividend, interest, salary, pension etc. This mode is also used for collection of bills for telephone, electricity, water, various types of taxes, payment of EMIs , investments in mutual funds , payment of insurance premium etc. There are two types of ECS , like most other banking transactions, ECS credit and ECS debit. An ECS credit is used by a bank account holder , usually a large company or an institution for services like payment of dividend, in terest, salary, pension etc. If your mutual fund pays you dividend to your bank account, of all probability it is being paid through ECS credit.ECS debit, on the other hand, is used when a company or an institution is getting money from a large number of people. For example if you are investing in a mutual fund sc...

WEALTH TAX

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 WEALTH TAX   WHAT CONSTITUTES WEALTH? For wealth tax purposes, "wealth" means property , urban land, car, jewellery , yacht, boat, aircraft and cash in hand in excess of Rs 50,000. CAUTION POINT | Do not think you will have an easy escape from wealth tax by transferring your `wealth' without consideration to your spouse or minor child. Such assets will also be considered as your wealth. HOW TO DETERMINE YOUR TAXABLE WEALTH Add the taxable value of the above assets (computed as per the detailed rules for valuation) owned by you as on March 31 (for FY 2014-15, it will be March 31, 2015). In case you sold your car during the year, it will not be taxable wealth. Deduct loans if any obtained by you to acquire any of the taxable assets from the value of gross tax out for at least 300 days in a...

Equity Savings Fund

Invest Equity Savings Fund Online   The best part about these funds is that they are subject to equity fund taxation and at the same time are structured like MIP like funds . This new category, equity savings funds , offer a little of everything. They allocate money to equities & equity related instruments, and fixed income. They aim to generate returns by diversification. Such funds invest in fixed income and arbitrage to protect the investors from short term volatility and equity for capital gains. The best part of these funds is that they are subject to equity fund taxation and at the same time are structured like MIP funds.   MIP funds however are subject to debt fund taxation. Investors Equity savings funds are suitable for the following: First time investors who seek partial exposure to equity with less volatility and greater stability Investors seeking moderate capital appreciation with relatively lower risk Those wh...

How to Pick Top Performing Mutual Fund Schemes

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   How to Pick Performing Schemes  Funds that continue to stay in the top grade of performance over longer periods are the ones to bet on, advise investment experts   The mutual fund performance charts of the past few months make for an impressive reading. Funds across all categories boast of stellar returns. Sample this: The mid and small cap category has averaged 77 percent return over the past 12 months, with the best fund delivering a staggering 120 percent. The tax-saving funds also average an impressive 51 percent, including a fund which has soared 92 percent. Many of the table-toppers are funds of proven quality and track record. However, there are also schemes that are not that well-known. Some of these have rarely made it to the performance charts in the past, yet, of late, they bo...

8% Government of India Bonds quick guide

For those seeking comfort in safety of returns, the Government of India issued 8% savings bond once again comes to the fore. First launched in 2003, these bonds are issued by the government with a maturity of 6 years. The bonds are available at all times with specified distributors through whom you can apply to invest in them. Here is a quick guide to what the bond offers and its features to ascertain to check for suitability. What are Government of India bonds Government of India bonds are like any other government bonds with specified rate of interest. The rate is fixed at 8% per annum paid half yearly, or you can opt for cumulative payment of interest at the end of the tenure. You can buy these bonds from State Bank of India and its associates, other nationalized banks and some private sector banks such as HDFC Bank Ltd and ICICI Bank Ltd, among others. The bonds can be bought from the offices of Stock Holding Corporation of India as well. They are available in physical form onl...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now