Update: I have done a more recent comparison on gold ETFs and that data can be found here. The methodology is the same which you can read there as well, but reading this post gives a good perspective on how this space has evolved. Updated Article.
This question keeps popping up in emails and comments from time to time, and I thought I’d address this with a post. Let me begin this post by saying that this is just my way of deciding which is the best gold ETF in India, and you are free to poke holes in this methodology, or even reject it outright, but if I were to invest in a gold ETF – this is the way I would go about it.
First off – I’d compare the expense ratios of all existing Indian gold ETFs, and see which are the ones with the lower expenses. I have already done that research earlier on this blog, and know that right now the Gold BeeS ETF from Benchmark Funds has the lowest expense ratio of 1%. Quantum Funds comes second with 1.25%. All the other funds charge higher expenses. The lower the expenses – the better it is because it leaves more on the table for investors.
Expenses alone are not enough for me because I want my investment to be liquid, and need the fund to have good volumes too. I went to the NSE website and gathered the volume data for all gold ETFs for the last month or so. I am presenting you yesterday’s volume data of all gold ETFs here. I am presenting just one day’s worth of data because that is pretty much representative of the overall volumes and is easier to read.
Gold ETF Volumes in India
As you can see from the image – Gold BeeS, which has the lowest expenses also has the highest volume, and by a large margin too.
That does it for me – and if I had to invest in a Gold ETF – it would be this.
Keep in mind though that this is just my opinion and not expert advice tailored to your investing situation. Also bear in mind that I am not going to invest in this ETF because I am not looking at investing in gold right now, and even if I was – I would probably go for the more direct option of buying gold coins.
Update: I have done a more recent comparison on gold ETFs and that data can be found here.
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well, Gold ETF is the easiest available way of investing in the gold, at the same time the tracking error of most of ETFs is negligible.
In order to invest in gold etf one can go for the IPO route, or can buy them directly on exchange through broker, But gold ETF can also be bought directly from the Fund house, provided the investor buys minimum of 1000 units.
Source:
http://www.reformistindia.in/2011/11/14/what-is-gold-etf-how-to-invest-in-gold-etf/
what is gold eft scheme and how to invest in this scheme .
if locking period in this scheme. return %
thanks
Can you please do a an analysis of the best Nifty ETF in India based on the expense ration and performance(C.A.G.R)
EXPENSE RATIO
Here is a post that I’ve already done about that Shinaj – I think you will find it useful.
http://www.google.com/url?q=http://www.onemint.com/2011/10/11/comprehensive-list-of-nifty-index-funds-and-etfs/
I understand that Gold ETFs are available online both at NSE and BSE. There is always a little price difference. So I think we should buy whereever the price is lesser and sell wherever the price is higher. Am I right? Or is it that if we buy at BSE we have to sell it at BSE only? Is liquidity different in the two exchanges?
You can do that if you see a price difference though I wouldn’t expect it to be much of a price difference at any time because that will create a good arbitrage opportunity. How much of a difference have you normally seen?
Liquidity is different in different exchanges and I suspect NSE to be more liquid for Goldbees trading than BSE though I have never seen the numbers.
Thanks Manshu.
if we can choose to sell them at either of the two exchanges, both price variation, however small and liquidity difference if any, should be of no concern. hope I have understood correctly.
That’s my understanding yes, though I have never actually done this myself, so I have no practical experience in this. I’ve always bought and sold on the NSE.
thanks Manshu.
seems equity is getting a silent bounce back ( 2012 Feb month, the time I posted ths msg
, in my POV, we must avoid GOLD and SILVER investment for now ad start looking equity for cherry pick. A detailed technical analysis can be found here:
http://arthaplanner.com/one/
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