Best Gold ETF's in India to invest in 2013
Several readers have been posting comments or sending emails asking whether there are any best gold ETF’s in India to invest in 2013. While all gold ETF’s in India track international gold prices and gold as underlying asset, there is small variation of returns. There are few factors to be looked while investing in the best gold ETF’s in India.
What are Gold ETF’s?
You might be aware that gold can be invested in electronic form through ETF’s. These gold ETF’s are available in the denomination of 1 gram value. You can buy any number of gold ETF units in a day when market is open. These are traded in stock exchanges on NSE and BSE. The price would fluctuate based on the price fluctuations of gold during the day.
Also read: Gold Mutual funds Vs Gold ETF's – Which is better option?
Are there any best Gold ETF’s in India?
Since all Gold ETF’s in India track underlying asset as gold, the returns would be almost same. However if you are planning to invest in gold ETF’s just keep three letters in mind. P.A.E. 1) Performance of gold ETF’s in last 3-5 years 2) Assets under management 3) Expense ratio of such Gold ETF’s
1) Performance of Gold ETF’s – What I mean here is to check the performance of gold ETF’s in long run. Do not buy gold ETF’s which just took birth or which have been there for short term. The longer the Gold ETF scheme existence the better to assess the performance of Gold ETF whether it is good or bad. 3 to 5 years performance can be considered as one of the parameter to say whether it is good gold ETF or not.
2) Assets Under Management (AUM) – AUM refers to the amount invested by investors. The higher it is the better it is as it shows the confidence investors has with such Gold ETF scheme.
3) Expense Ratio of Gold ETF – All gold ETF’s average expense ratio is around 1% of their AUM. Means every year, 1% of the returns would be reduced from your returns and they are used as expenses for management. Investing in low expense ratio would help you to increase your returns.
Best Gold ETF's in India to invest in 2013
We have analyzed all these 3 parameters and separated the top Gold ETF’s in India with others.
Also read: e-Gold Vs Gold ETF – Which is better?
Why do we need to invest in Gold ETF’s?
There are various ways to invest in gold. However, instead of physical gold, investing in e-gold or Gold ETF’s is best investment. Currently investment in e-gold is offered by NSEL only. Since NSEL has not yet come out of mess, investing in e-Gold would be riskier now. Instead invest in Gold ETF’s. Investing at least 10% of your portfolio in gold is always better as it gives long term appreciation and it would be useful to diversify your portfolio. We should not forget that Gold has provided a return of 20%+ in last 10 years.
Conclusion: Choosing a best gold ETF’s to invest would help you in longer run. Considering good performance Gold ETF, high AUM and low expense ratio Gold ETF is a key for the success of investment in gold.
If you enjoyed this article, share it with your friends and colleagues on Facebook and twitter.
Suresh
Best Gold ETF's in India to invest in 2013
- Kosamattam Finance NCD – Nov-2024 Issue – Details and Review - November 24, 2024
- Best Large Cap Mutual Funds to Invest in 2025 - November 23, 2024
- How to Balance Risk and Reward in Your Investment Portfolio - November 19, 2024
Excellent delibaration
Dear Suresh,
please guide for investment in mutual funds.Which is the best mf in equity for 2014.I want to start by SIP.Also like to buy gold ETF.
You can look for the following funds. Quantum Equity fund, ICICI Focused blue chip fund, Birla SL Front line, HDFC Top-200 fund etc.
Hi Suresh,
I wish to know why the prices of individual ETFs (and consequently, their gold funds) increases by a different % everyday. For eg; on 1st October, SBI Gold fund went up by 0.38%, HDFC Gold Fund went up by 0.45% and ICICI Pru Gold Savings Fund went up by 0.26%. Is it because of demand-supply issues of their respective ETFs on that day? How important is it to factor demand-supply while buying a Gold Fund ?
Regards,
Varun
Hi Varun, What you said is correct, however gold ETF’s track international gold prices.
Whether the above return for 1,3,5 yrs is a return for that year or a cummulative/ annualised return?
Annulised return Prasad
I checked economictimes.indiatimes.com and the expense ratio of top 5 schemes you mentioned are as shown below:
SBI Gold ETS – 1.03%
UTI Gold ETF – 1.06%
R*Shares Gold ETF – 1.09%
GS Gold BeES – 1.00%
Kotak Gold ETF – 1.00%
Hi Sri, They can change to some extent. e.g. earlier when I analysed SBI Gold ETF it was 0.93%, now increased to 1%
Hi Suresh,
I have read your gold ETF blog and it is really nice blog to understand in details.
Can you please suggest good Gold ETF for investing in 2014 .
Thanks in advance
Hi Rajdip, The list remains same. Though I indicated for 2013, these are good for long term and you can invest them now.
Dear Suresh,
Is this the right time to invest monthly SIP of Rs.5000/- in Axis Bank Gold ETF?
Which one is better to invest Axis Bank Gold ETF/SBI Bank Gold ETF or Axis Long Term Equity Fund (G) .
Kindly suggest. I have to make a decision.
Thanks & Regards,
Anand Sagar
Anand, I prefer SBI Gold ETF as expense ratio is low comparing to others. All Gold ETF’s track underlying gold. Regd your second poitn you are comparing gold ETF Vs Equity MF. Equity MF is always good, you can invest, however their objectives are different. I personaly prefer to invest in gold ETF @ 20% of portfolio and balance in equity and hybrid mutual funds.
Dear Suresh,
Please give me some clarification on below queries
1. Gold ETF unit is 1gm gold or it is an approximate value?
2. Is the daily ETF value depends on international market or only Indian market?
3. What is the present trend?
Hi Saju, 1 unit equal to 1 gram. However the price would be different from Indian gold price as gold ETF’s track international prices. Yes the daily prices would depend on intl markets. Gold prices are stabilising at 3K/gram. Hence you should accumulate now and invest for long term.
Hello Mr. Suresh,
Nice piece of article. I just had one querry, will investing in Gold ETF's need a separate Demat Account like the one needed for E-Gold or the existing demat account of a person with which he trades in shares etc. will suffice in this case.
Hi Aniket, No seperate demat account. You can use existing account.
Hello suresh ji, I want to know your opinion on Reliance Gold Saving Fund. I have invested in Reliance gold and equity. what will be the future market for gold.
Hi Pooja, This is good fund, but it is launched just 2 years back. Comparatively new fund. But you can investin Gold ETF’s instead of gold funds. See this article and let me know your opinion. https://myinvestmentideas.com/2013/02/gold-mutual-funds-and-gold-etfs-which-is-the-better-investment-option/
Can NRE's invest directly in Gold ETF's and is there any tax on the returns earned ?
Hi Nanmith, these are like any other stocks which any one can buy. However you should open a demat account with NRE/NRO account to do trading. Taxation is similar like stocks. Beyond 1 year is long term capital gain
Hi suresh,
Among the above listed ETF schemes why the price of units vary. And also which one is best to invest?
Thanks
Mubarak Shaik
Hi Shaik, The NAV would change due to 2 parameters. One is when the MF started. If it has started 3 years back with Rs 10 and been appreciated, it would get appreciated say Rs 14. On other side, another MF started 2 years back with Rs 10 and it would have gone in same pace and NAV would be Rs 13. It does not mean that second one is bad. We should not check NAV. We should check the performance. You can invest in top ETFs like SBI Gold ETF or UTI Gold ETF or R* Shares Gold ETF’s ranks top though there is small variation in returns.