What is Gold ETF


A Gold ETF or Exchange-traded Fund is an investment fund in India.

Buying and selling Gold ETF units and trading them have many advantages than investing in physical gold.

In India, people love gold and buy it regularly for different reasons irrespective of its high value. Apart from their obsession with gold ornaments, most of them considered it as a good investment scheme. But do you know what Gold ETF is?  You may have heard this term many times but do not know what it means. It is an open-ended mutual fund scheme which has been gaining popularity in the country in the recent past. Let us know more about Gold ETF and the benefits of investing in this scheme.

Gold ETF – Open-ended mutual fund scheme

Gold ETF shall be a gift from the government for the people in India for their love and passion for gold. They do not like any other commodity with so much dedication and passion than gold. A Gold ETF or Exchange-traded Fund is an investment fund in India, which is an open-ended mutual fund scheme. People can purchase Gold ETF through open-ended mutual funds. In this scheme, money collected from people through the Gold ETF units and invests again in gold bullions. An investor can invest in a portfolio that contains many companies by investing through Gold ETFs. It allows them to invest in Gold Stock Exchange-Traded Funds and Gold price Exchange-Traded Funds.

Benefits of Investing in Gold ETF

Buying and selling Gold ETF units and trading them have many advantages than investing in physical gold. Experts claim that the returns from this scheme are almost the same as that of the earnings one can make by investing in physical gold. Here are the advantages of investing in Gold ETF.

  • Open-trade: One of the great advantages of Gold ETFs is its open-trade system. Since the rate of gold displays publicly at the stock exchange, anybody can check it conveniently, whether it is for a particular day or hour.
  • Easy transactions: Gold ETFs are easy to transact, you can buy and sell it on any trading day of stock exchange in few simple steps. People can buy their units from any part of the country, and it is profitable than buying physical gold. The reason is that no GST applies to these transactions.
  • No making charges: You need to pay the making charges if you buy physical gold such as jewelry, coins, bars, etc., but no need to pay any making charges if you invest in Gold ETFs.
  • No purity issues or threat of being stolen: You need not worry about the purity of the gold or steal the commodity as all the issued Gold ETFs units are linked to your KYC and other credentials. You need not pay any locker fees to the bank for using their locker as in the case of physical gold if you invest in these open-ended funds.
  • Easy trading: One can easily trade Gold ETF units just like equities and can invest through a stockbroker or fund manager. Apart from that, this investment instrument has great liquidity compared to the liquidity of your physical gold.
  • More Tax efficient: Gold ETFs are tax-efficient as it can provide tax benefits to the investor. This investment instrument does not have any wealth tax or securities transaction tax, make it a popular investment option in India.
    A short term capital gain tax is levied if held for less than 36 months or 3 yrs and being taxed as per applicable tax, 20 % long term capital gain tax on units held for more than 36 months or 3yrs after indexation.

Gold ETFs is a good investment instrument that consists of gold contracts but cannot redeem for gold. Even if it is another great mutual fund scheme to invest, try to understand the advantages and disadvantages before investing your money in it.

That’s why Comparte Investment team asks do you have “Nivesh Ki Aadat”.

With this one can say “Mutual Fund Sahi hai”,  so let me do Nivesh