Gold ETFs smarter option than buying physical gold: NSE

K. R. Srivats New Delhi | Updated on November 12, 2017

National Stock Exchange has launched a new Web site — — on Wednesday. It wants to spread awareness of the benefits of buying gold exchange traded funds (ETFs) over physical gold.

Buying Gold ETF is basically purchasing gold in an electronic form. The buying is done just like one buys shares of any company through a broker. Through Gold ETFs, one can even buy just one gram or half a gram of gold at a time. Besides bringing in flexibility to investors, buying Gold ETF is also tax efficient as such purchases are not subjected to value added tax. There is also no wealth tax on units of Gold ETFs.

The basic message that is sought to be conveyed to investors and households is that Gold ETF is a smarter option than any other form of gold. Gold ETFs are an ideal product to efficiently participate in the bullion-run witnessed in the markets.

Gold prices had risen more than 22 per cent compounded annual growth rate (CAGR) since April 2007. While 10 gm of gold cost Rs. 9,357 in April 2007, it is now priced at over Rs 20,000.

Becoming popular

Gold ETFs have begun to capture the fancy of investing community going by the rise in assets under management (AUM). From a level of Rs 1,590 crore as at end March 2010, the AUM had gone up to Rs 4,400 crore at end March 2011, reflecting a 176 per cent increase.

In 2007, there was only one Asset Management Company (AMC) offering Gold ETF in the market. As on date, there are 10 AMCs offering Gold ETFs. The total traded value of Gold ETFs on the NSE for financial year 2006-07 stood at Rs 13.95 crore. This has grown manifold to Rs 4,074.30 crore for financial year 2010-11, an astounding growth of 313 per cent CAGR.

Last year, on the auspicious occasion of Akshaya Tritiya, Gold ETFs to the tune of Rs 172 crore was traded on the NSE. By all indications, things will only be better this year on Akshaya Tritiya on May 6, say market watchers.

Published on April 21, 2011

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