Gold ETFs
Gold Exchange Traded Funds (ETFs) provide you with an option of investing in gold without physically storing it. They provide both the value of gold and the liquidity of stock trading. At Kotak Securities, we offer you an easy and simple way to buy and sell gold ETFs online.
List of Gold ETFs
114.79 (+0.69%) | 16,169.11 | 71.18% | 32.90% | 20.05% | 17.08% | |
112.44 (+0.91%) | 3,319.46 | 70.69% | 32.90% | 20.09% | 17.25% | |
113.00 (+0.67%) | 3,194.47 | 78.43% | 34.91% | 20.44% | 17.61% | |
130.63 (+0.70%) | 1,807.42 | 72.40% | 34.25% | 34.25% | 34.25% | |
134.50 (+0.71%) | 679.07 | 70.86% | 39.73% | 39.73% | 39.73% | |
130.83 (+0.89%) | 1,408.09 | 72.00% | 32.64% | 32.64% | 32.64% | |
131.96 (+1.05%) | 115.92 | 71.37% | 53.73% | 53.73% | 53.73% | |
132.00 (+0.72%) | 165.89 | 53.79% | 53.79% | 53.79% | 53.79% | |
131.85 (+1.27%) | 17.95 | 48.51% | 48.51% | 48.51% | 48.51% | |
12,171.05 (+0.69%) | 981.46 | 80.02% | 35.28% | 21.83% | 18.24% | |
133.43 (+0.72%) | 62.92 | 8.01% | 8.01% | 8.01% | 8.01% | |
13.07 (+0.85%) | 734.36 | 72.05% | 36.18% | 36.18% | 36.18% | |
[-] | [-] | [-]% | [-]% | [-]% | [-]% | |
133.15 (+1.22%) | 7.89 | 34.79% | 34.79% | 34.79% | 34.79% | |
130.75 (+1.00%) | 270.28 | 71.52% | 43.33% | 43.33% | 43.33% | |
118.21 (+0.58%) | 2,043.65 | 73.27% | 33.16% | 20.35% | 17.13% | |
11,687.00 (+0.83%) | 506.71 | 72.00% | 33.05% | 20.15% | 18.42% | |
111.30 (+0.71%) | 36,904.69 | 71.11% | 32.69% | 19.89% | 16.93% | |
114.79 (+0.69%) | 16,169.11 | 71.18% | 32.90% | 20.05% | 17.08% | |
134.92 (+1.25%) | 9.47 | 1.65% | 1.65% | 1.65% | 1.65% | |
12.55 (+0.32%) | 8.60 | 20.49% | 20.49% | 20.49% | 20.49% | |
114.94 (+0.74%) | 16,431.42 | 71.30% | 32.82% | 20.08% | 16.96% | |
112.23 (+0.84%) | 10,150.89 | 70.43% | 32.66% | 19.98% | 17.16% | |
115.19 (+0.62%) | 14,381.20 | 72.12% | 33.05% | 20.28% | 17.02% | |
21.14 (+0.62%) | 316.37 | 71.69% | 48.92% | 48.92% | 48.92% | |
111.36 (+0.89%) | 554.11 | 72.16% | 32.92% | 20.10% | 16.90% |
What is a Gold ETF?
A Gold ETF is an exchange-traded fund that mirrors the domestic price of physical gold. Each unit usually equals one gram of gold, held digitally. Instead of buying and storing gold, you can purchase Gold ETFs on the stock market just like shares.
Gold ETFs let you trade gold easily and offer high liquidity and transparency. Since they trade at market prices during exchange hours, Gold Exchange Traded Funds provide a convenient and reliable way to invest in gold without holding it physically.
Purpose of Gold ETF
Investors prefer Gold ETFs because they are simple and convenient. Buying physical gold can be difficult. You need to check its purity, pay making charges, and find a safe place to store it. Gold ETFs solve all these problems.
It is possible to invest in Gold Exchange Funds online using your Demat and trading account. You can start with small amounts and increase your investment over time. You can also sell your units anytime during market hours. This makes them very flexible.
How Does a Gold ETF Work?
Gold ETFs are developed and managed by financial institutions and asset management companies. These fund houses purchase gold from the open market and store it in secure vaults. Once they buy the gold, the fund houses create ETF units for investors.
The fund houses can redeem them when investors wish to sell their ETF units. During redemption, units are repurchased from investors by the fund houses. On occasion, the fund houses may also sell a small amount of gold to maintain their holdings.
Types of Gold ETFs in India
In India, there are various kinds of Gold ETFs, and you can select one depending on your investment goals.
- Physical Gold ETFs: These invest in gold bullion and are linked to the performance of the price of gold. A unit of physical gold backs each share.
- Gold Mining ETFs: These ETFs invest in companies that are engaged in mining and other aspects of gold production. Their performance is linked to the price of gold.
- Leveraged Gold ETFs: These seek to return double or triple the daily performance of gold using financial derivatives. They have more potential gain, but also more risk.
- Inverse Gold ETFs: These are designed to move in the opposite direction of gold prices. They are used to make a profit when the price of gold falls.
Advantages of Investing in Gold ETF
There are many benefits of investing in top-rated Gold ETFs. They are easy, safe and hassle-free. Here are the main benefits:
- Hedge Against Inflation: Gold’s price increases with time. This is why gold ETFs are a great means to secure your savings without having to buy physical gold.
- High Liquidity: It can be bought or sold from the stock exchange at any time the market is open.
- Cost-Efficiency: They come with low management fees and no making or storage charges.
- No Storage Hassles: You can invest online without the hassle of storing anything physically.
Risks of Investing in Gold ETFs
Gold ETFs come with a few risks to consider.
- Tracking Error: The ETF price may not perfectly correlate with the real gold price, slightly impacting returns.
- Liquidity Risk: Low trading volumes can sometimes make it difficult to sell units quickly and at a fair price.
- Taxation: Gains from these investments are taxed depending on the holding period.
Gold ETFs vs Physical Gold vs Sovereign Gold Bonds (SGB)
Ownership | You own units representing gold. | You own physical gold. | You hold government-backed bonds linked to gold. | |
Trading | Traded on stock exchanges. Can buy/sell anytime during market hours. | Must be bought/sold from jewellers or dealers. Less flexible. | Bought from banks or post offices. Can be redeemed at maturity. | |
Storage | No storage worries. Fund houses keep gold safe. | Needs safe storage at home or a locker. Risk of theft. | No storage needed. Digital or certificate form. | |
Cost | Low management fee. No making charges. | Making charges and storage costs apply. | Fixed issue price. No making charges. | |
Liquidity | High. Can sell anytime on the exchange. | Medium. Selling depends on the market and the buyer. | Medium. Can sell only on the exchange or at maturity. | |
Returns | The gold ETF returns are based on the gold price. | Gains depend on the gold market price. | Gold price plus interest (usually 2.5% per year). | |
Taxation | Short-term and long-term capital gains apply. | Gains are taxed as per the gold rules. | Long-term capital gains are exempt if held till maturity. |
Who Should Invest in Gold ETFs?
Gold ETFs are appealing to various investors. They are perfect for individuals looking to add gold exposure to their investment portfolios without having to deal with physical gold. The best gold ETFs are beneficial for the following:
- First-time investors
- Those with long-term goals
- Those who want to avoid the hassle of purchasing and storing physical gold
- Those who wish to avoid additional charges for physical gold jewellery
Factors to Consider Before Investing in Gold ETF
Before investing in top-rated Gold ETFs, it is important to check some key factors. These help you make smart investment decisions.
- Lower TER (annual fund fees) means more of your money stays invested in gold.
- A small difference between the ETF price and the gold price is called tracking error. Lower tracking error is better.
- Know how taxation works for gains in Gold ETFs.
- Determine how long you would like to hold on to your investment
Taxation on Gold ETFs in India
Gold ETFs in India are subject to taxation based on how long you hold them.
- If you sell those top Gold ETF units within three years, the tax on profit would be short-term capital gains tax. It is then added to your income and taxed in accordance with your tax slab.
- If you sell after three years, the profit is considered a long-term capital gain. LTCG from Gold ETFs attracts 12.7% tax without indexation benefit.
How to Invest in Gold ETFs via Kotak Securities
Investing in top-rated Gold ETFs through Kotak Securities is simple and convenient. You can start small and grow your investment over time without any hassle. Use our app or website and follow these steps to start:
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Step 1: Open a Demat and Trading Account You need a Demat and trading account with Kotak Securities. This allows you to buy and sell Gold ETF units online.
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Step 2: Log In Log in via our home page, on the web or on your mobile device. It's intuitive and easy to use.
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Step 3: Choose Your Gold ETF Review the fund’s details before investing. Look at details such as price, liquidity or fund house.
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Step 4: Decide Investment Type You can invest as a lump sum. The other option is to go for an SIP for investing periodically.
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Step 5: Place Your Order Type the number of units you want to purchase. Confirm the order and payment. Your top Gold ETF units will be credited to your demat account.
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Step 6: Monitor Your Investment Track prices in real time to sell units at any time during market hours.
Key Performance Metrics Explained
When investing in Gold ETFs, it is important to understand key performance metrics:
- Total Expense Ratio (TER) – This is the annual fee of managing the fund. A lower TER contributes to better returns.
- Tracking Error – It reflects the difference between an ETF’s price performance and the actual gold price. A low tracking error means that the ETF closely tracks gold prices.
- Bid-Ask Spread – This is the difference between the price at which an ETF can be purchased and sold. Narrower spreads translate to lower trading costs and make it easier to buy or sell.
Conclusion
Gold ETFs are a convenient and intelligent way to invest in gold. They are secure and low-cost. Prices can be followed in real time, and you can make your investment online. Gold ETFs also save you from the inconvenience of having to store physical gold and incurring extra charges.
At Kotak Securities, we make it easy to start your Gold ETF journey. Open your Demat and trading account now to begin investing. You may invest a lump sum or start a SIP to build your savings over time.