Gold ETFs, Is gold ETF good investment, What is Gold ETF, Gold ETF returns | Personal Finance News

A Gold ETF is an exchange-traded fund (ETF). AMFI data showed that investors have been investing heavily in Gold ETFs in the recent times. Gold ETF is subject to market risks.

People are heavily investing in Gold ETFs (Pic: Pixabay and depositphotos)

New Delhi: Gold has always been one of the most preferred investments in India. Traditionally, Indian households have a knack of buying jewellery and treat it as future investments. Gold is one asset which has been all-time hit and has paid off well over time. Though people in India prefer buying gold in the form of jewellery, several financial experts suggest that people who are planning to buy gold for future investments should invest their money in ETF, Sovereign Gold Scheme, Gold Coins etc. In this article, we inform you about Gold ETF investment, which has turned out to be a penchant for gold investors in the recent times.

What is Gold ETF

Association of Mutual Funds in India (AMFI) states that Gold ETF is an exchange-traded fund (ETF) that aims to track the domestic physical gold price. Gold ETFs in paper or dematerialised form i.e. means purchasing gold in an electronic form. One Gold ETF unit is equal to 1 gram of gold. Gold ETFs are listed and traded on the National Stock Exchange of India (NSE) and Bombay Stock Exchange Ltd. (BSE) like a stock of any company.

Is Gold ETF a good investment?

Several financial experts say that Gold ETF is safe and secure as it is in digital/paper form and there is no threat of theft. Also, investors do not have to pay making charges for buying Gold ETF so that money is also saved, whereas any form of jewellery invites a significant amount of making charges.

There has been a spectacular rise of Gold ETFs in 2023 and 2024. AFMI data shows that the total inflows in Gold ETFs was Rs 31,224 crore in 2023-24, while it was Rs 22,737 crore in 2022-23. The Asset Under Management (AUM) of gold funds rose to Rs 32,789 crore at April-end from Rs 31,224 crore in the preceding month, AMFI stated. ETF Gold has given 18 per cent returns (average) in 2023 to the investors.

There has been an exponential jump in the folio numbers in gold ETFs. It increased by over 1 lakh to 51.84 lakh from 50.61 lakh in March 2024.

Why people are preferring Gold ETFs

The guidelines are very strict so investors feel safe to invest their money in buying Gold ETFs.

Gold ETF are traded on Exchanges which are controlled by SEBI.

The prices in an ETF are similar to physical gold. When an individual redeems Gold ETF, the investor doesn’t gets physical gold, but receives the cash equivalent.

There is no making charges so compared with gold jewellery, the prices are considered to be less.

Investors are investing in Gold as they believe that it is less impacted by inflation, interest rate hikes, and geopolitical events.

(Disclaimer: Gold ETFs are subject to market risks impacting the price of gold. This article is only meant to provide information. News9live.com does not recommend buying or selling shares or subscriptions of any Gold ETF, Shares, IPO and Mutual Funds.)