Gold ETF Benefits: Gold ETFs have emerged as a major investor confidence among Corona Crisis. Investors have invested close to Rs 6,919 crore in Gold Exchange Traded Funds (ETFs) in the financial year 2020-21. This is 4 times more than in FY 201920. Then there was an investment of 1614 crores in Gold ETFs. This was the second consecutive financial year when gold ETFs were invested. Prior to this, there were continuous withdrawals from Gold ETFs from 2013-14. This information has been obtained from the data of Association of Mutual Funds in India (AMFI), a body of mutual funds.
In fact, due to Corona virus epidemic, there is an increased risk in the capital market. There has been uncertainty about growth. In such a situation, gold has become a safe haven for investors. In the last financial year, where gold crossed the rate of Rs 50 thousand per 10 grams for the first time, it also crossed 56000 and made its alltime high. For this reason, there has been a record investment in gold ETFs considered safe.
What is Gold ETF
The best way to invest in paper gold is to buy gold ETFs. It is an open-ended mutual fund, which is based on falling gold prices. ETFs are very cost-effective. A gold ETF unit means 1 gram of gold. That too completely pure. It gives the flexibility of investment in stocks along with investment in gold. Gold ETFs can be bought and sold on the same lines as BSE and NSE.
Benefits of Gold ETF
- Gold ETF units can be bought like shares.
- Purchasing charge is less as compared to physical gold.
- 100 percent purity is guaranteed.
- There is no hassle of buying and maintaining physical gold.
- Investing in the long term also gives good returns.
- It has the facility of investment through SIP.
- Investing in Gold ETFs is less volatile than investing in the stock market.
- Gold ETF does not have any problem regarding purity due to being in electronic form.
- Gold ETFs can be purchased online through a demat account.
- High liquidity means that you can buy and sell it whenever you want.
- You can also start a Gold ETF with 1 gram ie 1 Gold ETF.
- Physical is cheaper than gold in terms of tax. Long-term capital gains have to be repaid on gold ETFs.
- Gold ETFs can also be used as security to take loans.
- On physical gold, you have to pay the making charge. But this is not the case in Gold ETFs.
How to invest in Gold ETFs?
It is necessary to buy at least one unit for investment. Each unit is of 1 gram. Gold ETFs are similar to buying stocks. Gold ETFs can be purchased only from the existing trading account. Units of Gold ETF are deposited in Demat account. Gold ETFs are sold through a trading account only.
Will there be any further attraction
Ajay Kedia, director of Kedia Commodity, says that cases of coronavirus infection are increasing again worldwide. The interest rates of central banks are below. There is a possibility of further pressure in the stock market. There is uncertainty about the time to come. In such a situation, gold is also seen in safe haven. Anyway, gold is at a discount of 10 thousand rupees from its record high. In such a situation, there is a right opportunity to invest in gold. However, it is difficult to say that just like FY 2021, the attraction of Gold ETF will remain this year.
Some Best Funds
HDFC Gold Exchange Traded Fund
SBI ETF Gold
ICICI Prudential Gold ETF
Nippon India ETF Gold
Trend of investment before
Earlier, in 2018-19, there was a net withdrawal of Rs 412 crore from Gold ETFs. In 2017-18, Rs 835 crore was withdrawn from Gold ETFs, Rs 775 crore in 2016-17, Rs 903 crore in 2015-16, Rs 1,475 crore in 2014-15 and Rs 2,293 crore in 2013-14. However, during the year 2012-13, an investment of Rs 1,414 crore was made in this segment. For the past few years, retail investors have poured more money into the equity market than gold ETFs in search of better returns.
(Note: We have given information here based on the data of Amphi, discussions with experts and the performance of the fund. Seeing the risk of the market, take the opinion of the experts before investing.)