Digital gold, especially that of mutual funds and exchange-traded funds, is set to take the centre stage this Akshaya Tritiya on Saturday as it helps investors to buy into gold for less than ₹55 a unit even as gold prices hover above ₹60,000 a 10 gram. Akshaya Tritiya is considered an auspicious day for purchasing valuable items as per the Hindu lunar calendar.

Chintan Haria, Head (Investment Strategy), ICICI Prudential AMC, said this Akshaya Tritiya an investor can start investing in gold ETF with as low as ₹53 a unit.

Investing in gold ETFs will not only bring diversification to portfolio but also offer easy liquidity, an aspect that physical gold does not offer, he added.

Gold ETF units can be bought and sold like an equity share through a trading account and are safe from theft as they are stored in a demat account. As the investment is backed by gold bullion of 99 per cent purity, investors need not worry about the purity aspect.

ETFs turnover surges

Though the government has recently removed the long-term capital gain benefit on gold mutual funds and ETFs, investors stand to benefit from steady appreciation in value of gold over period given the global economic recession and looming uncertainty.

The turnover on 12 listed gold ETFs jumped 58 per cent to ₹49 crore last month from ₹31 crore logged on last year Akshaya Tritiya. Gold prices have jumped 19 per cent to ₹60,616 per 10 grams on Thursday from ₹50,808 registered on last year’s Akshaya Tritiya day.

Hemen Bhatia, Head ETF, Nippon Life India Asset Management said investors will continue to invest in Gold and Silver ETFs as they have low correlation with other asset classes and achieve relatively better risk adjusted returns.

Additionally, he said there are a lot of inherent advantages of investing in precious metal ETFs such as ease of investing, transparency, and no hassles of storing which make them an attractive vehicle for investors wanting to seek exposure to gold and silver, he said.

The total asset under management of gold ETF among major fund houses was about ₹17,000 crore. Besides investors, central banks including RBI has been buying into the yellow metal in these times of uncertainty.

According to the World Gold Council, the annualised rate of gold buying by central banks has hit 1,724 tonnes against an average of 512 tonnes over the past decade.

Somasundaram PR, Regional CEO, India, World Gold Council, said recent tax changes have put gold funds at a tax disadvantage which could offer an unintended advantage to physical gold buying through digital mode, reinforcing the urgent need for a regulatory framework for them.