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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s i like to invest.
You can invest in an ETF just like you do in a stock. Do you have an account with a broker?
Gold and silver jewelry. Maybe a good investment too. There are many other items for sale on my site. If you get your own site, sign up throught my email and get double enhancement credit.
Hi,
I am new to the world of ETFs and I was looking to invest in the best Gold ETF when I came across this useful post. As you say Goldbees is best having lowest expense ratio of 1% and Quantum Gold the second best, having expense ratio of 1.25%. I notice while Gold ETF has the NAV of Rs.1800 + , Quantum Gold has the NAV of Rs. 900+. Interestingly, % returns from both the funds are more or less the same. So, shouldn’t I choose Quantum over Goldbees as former is available at half the price of the latter thereby being more affordable? However, I also observe that volume traded in Quantum Gold is much less than that of Goldbees. I hope to hear from you. Thanks!
@Chhavi: The unit considered in Quantum is approx. half-gram while in Goldbees its 1 gm- hence Quantum’s NAV is half of Goldbees …
Dear Kiran,
Thanks for clearing my doubt. That was very helpful indeed. Thanks again!
hai kiran i seen your reply it is nice suggestion, now i am new to invest gold etf funds i am planing to invest monthly 5000 in gold etf few are recomanded SBI ETF this is beter than Goldbees pl give me reply
update of all getf funds
Interested in goldETF.Is there anyone who could helep me?I am from Chandigarh.
DEAR SIR,
I WANT TO KNOW ‘MARKET CODE’ OF GOLD ETFS IN BSE & NSE BOTH. YESTERDAY I TAKEN PRICE OF GOLD ETF IT WAS SHOWING ABOUT 1995/- PER UNIT APPROX HOWEVER MCX GOLD WAS SHOWING VERY HIGHTER RATE. WHY THERE IS MAJOR DIFFERENCE.
THANKS
Here are the codes of ETFs on NSE
* GOLDBEES
* GOLDSHARE
* KOTAKGOLD
* RELGOLD
* QUANTUMGOLD
* SBIGETS
* RELIGAREGOLD
* HDFCMFGETF
* IPGETF
* Axis Gold ETF
You can search these tickers on BSE’s website, and get the tickers there as well.
I think you were looking at a future contract on MCX Gold which is about 10 grams whereas most of these ETFs represent just one gram of gold, and that might be the cause of the difference. Can you tell me what were you looking at specifically?
Hi Sir,
i am new to this ETF market, i have an online demat account, i would like to invest in silver , please suggest how can i buy some silver (invest in silver) and sell it when i want to sell.
i came to know that there are no Silver ETF in india,
can i do trading on any of the foreign exchanges using indian online Demat account ?please advise
regards
vamsi
Vamsi here is a post that tells you about silver alternatives in India:
http://www.onemint.com/2010/11/16/silver-etf-alternatives-in-india/
Dear Vamsi,
Yes there is no Silver ETF as of now. You can buy E-Gold and E-Silver which is safe and secured and better than even holding of Physical metal. You can buy and sell anytime and the rates are available online on NSEL site.
You can buy through us if you want.
Why to invest in Gold ETF when i can directly buy gold from goldsmith ?
What is the benifit of Gold ETF?
If you are able to buy and sell gold coins directly from the goldsmith, and get a good rate, then that is a good option for you. Some people prefer the convenience of electronic trading and like the fact that they don’t have to worry about storing gold, so they buy it in the form of ETFs.
one factor that we must be aware of while buying from a goldsmith is the purity of the gold. gold in form of jewelery bought from goldsmith WITHOUT the BIS Hallmark certification is most likely to be below the carat you are paying for. also there will be a 11-15% “making charge” that is a straight loss when you want to liquify the gold jewelery.
in all, a sure cost of 11-15% of the cost of gold and also the cost of holding physical gold adds to the attractiveness of Gold ETFs.
Manshu, that means considering expense ratios and other administrative charges of ETFs direct investment in gold is always give more returns, if we keep aside worry of storing gold.
Sarika,
when you sell physical gold to goldsmith they deduct a charge of 10-20% of gold value. That is a much bigger amount in comparison to return. that means if you earned 20 % gain in a year and sell that gold after two year then you will get only 15.2 % return if you sell it to goldsmith. Further, there is always a chances of less pure gold. You can purchase gold coins from bank and post office. but you can not sell them back your gold coin purchased. Thus i think gold etf is much liquid and safe investment.
I would like to invest in Gold ETF. But i am very new to this. Can i do the investment with my existing trading account or i have to open a new one. Also want to know that Gold ETF rate is exactly the 10% of GOLD market price. Please revert me on this
Yes, you can invest using your existing trading account – there is no need to open a new account just for this. One ETF unit often represents 1 gram of gold, and that’s why you see the price being about a tenth of the quoted rate which is quoted for 10 grams.
Which are the 2 best performing Gold ETFs now? is it a good idea to invest in Gold ETFs by SIP plans? Is it possible under Indian system?
There is no direct way of investing in ETFs through a SIP. This post tells you about some indirect ways in which you can set up a gold ETF SIP.
Does ETF value also depends on other aspects? or is it totally depended on the Gold rate.
It depends on other factors like how much expenses the fund is charging investors (the lower the better), and the tracking error, which is how efficiently the fund is tracking gold prices.
can iI convert Gold Etfs into physical gold ?
No, I don’t think that’s possible.
No as ETF is not Gold itself. Its a kind of share which you buy. Don’t get confused it with the Gold certificate you use to buy from Banks.
I want to invest in gold but not inerested in purchasing a phicical gold…..
then which gold market can i invest????????????
your option is to buy E-Gold and E-Silver which are traded on NSEL.
What are the expense for investing in Gold Etf? Are there any exit expenses or any recurring expenses annually?
Why there are different entry expenses for gold etf by different companies?
I would like to undergo free training. Please let me know what next ?
I would like to open gold etf account any body help me, and give me some good broker details,
If I buy ETF through my trading account, do I have to pay the service charges to my broker as well? So, for an Indiabulls account , I pay 1% other than the fund house’s expenses, right?
Right.
Hi I want to invest in Gold ETF, what are the condition in investing in.
I’ve invested a small amount in Gold ETF. I just want to know what is goldbees and quantum gold. And also want to know the growth of it. Wher will I check these informations ?
Goldbees and Quantum Gold, both are kinds of Gold ETFs. The unit considered in Quantum is approx. half-gram while in Goldbees the unit considered is one gram and hence Quantum’s NAV is roughly half of Goldbees NAV. Like today on the website of moneycontrol, NAV of Goldbees is Rs.1869 while NAV of Quantum Gold is Rs.927 on NSE.
heloo,
i want to know that is there iny risk in gold etf.
how can i invest and what is the profit.
Hi Aditya, I just realized that I wrote an entire post responding to your comment but didn’t actually leave a link here, so here goes:
http://www.onemint.com/2010/09/21/is-there-any-risk-in-a-gold-etf/
Hi,
Besides considering the aspects like expense ratio & volume do we have to also consider reliability of the fund as well, meaning
1) Are all the present Gold ETF’s in india reliable? or is it suggested safe to buy Gold ETF’s only from funds like UTI, SBI, HDFC, ICICI, Kotak.
2) Can any listed Gold ETF fund in NSE get de-listed? if yes, then what happens to its investors?
Cheers,
Amrut.
Hi Again Amrut!
1. Gold ETFs in India are supposed to be backed by physical gold, so that should give you some comfort as far as the underlying asset is concerned.
But you will read a lot of threads online that say there is actually no gold and other crazy scary stuff like that. So if you trust the regulator then the reliability itself shouldn’t be a differentiating factor.
2. I don’t know of any gold ETF that got delisted in India, and don’t know what would happen. However, in the US, it is quite common for ETFs to delist, and most commonly I see that the investors are paid the closing NAV less any costs that are there.
One last word Amrut – there is always the option of buying physical gold if you are not comfortable with the paper product.
Dear friends ,can anybody help me to mention to invest in GOLD ETF in SIP form with NAV @Rs 10.I mean new ETF funds avilable in the market.
Hi
Can you pls tell me if there are any fund houses that run a fund on gold along with shares of companies dealing with gold (mining,jewellery etc)
Hi Swaroop,
There is only one listed gold mining company – Deccan Gold Mines Limited in India, but they aren’t profitable yet, and haven’t started gold mining as well.
Hutti Gold Mines is the only company in India that mines gold but it’s not listed.
Given this fact – there is a DSP Blackrock World Gold Fund that gives you exposure to global gold mining companies, but not local ones.
You can read details on gold mining here:
http://www.onemint.com/2010/10/10/gold-mining-in-india/
hai iam new invester in gold etf iam planing to by physical gold for use but i dont have that much many so i planed to invest sistamaticaly any gold etf for 5 years than i will by physical gold so please give me good and low expansive and safe gold etf fund details thanks waiting for reply
Koti, GoldBees from Benchmark is a gold ETF you can buy. You might know this already, but I thought I’d just note that you can’t exchange the ETF for physical gold, so when you buy gold jewelery eventually you will have to sell the ETF, get cash and buy physical gold.
Very good information about gold ETFs. i want also same informations about SILVER and also want to compare which one is best from ‘Return on investment’ point of view gold or silver
Sunil, there are no silver ETFs currently trading in the Indian market. There are other ways to get exposure to silver mentioned here: http://www.onemint.com/2010/04/15/silver-etf-in-india/ and a commenter has left a comment stating that if you have foreign stocks enabled in your trading account you can get exposure to US Silver ETFs from there also.
I also have a post this week about some more investing options in silver, so that will give you some more ideas. As for historical returns – I’ll look for information, and see if I can create a post in the next week or so.
Very good information provided, but still not sure for which ETF should I go?
I want to start SIP of ETF , Pl suggest some fund
Well Amit, I guess the question is why you want to start a SIP with an ETF? Normally people buy ETFs as a way to buy the underlying gold or index or oil or some other asset like that.
What is your goal with this?
I am an investor, and normally trade in shares only. But If i go for Gold ETF, which company can give the best returns of my investment. Though Gold ETF price is directly connected to the price of Gold, but i want to know which company has the lowest charges.
Gold BeeS is the one with the lowest charges Amit.
Hi Manshu,
Very good n useful information….I’m a NRI..Would like to invest in Gold ETF…How will I invest in ETF from abroad. Can you please throw more light on it…
Thanks VJ, I’ll try to write about that topic in the future, you can take a look at this link from ICICI Direct to get started though – it has useful info. You can use any other broker of your choice; I am just pasting this link here because I knew about it.
http://content.icicidirect.com/mailimages/ETF%20FAQ.pdf
Thanks Manshu for your quick response. ll check that link.
You’re welcome, appreciate your reply, and I’ll see if I can myself write something up for the future.
what is teh advantage of buying gold thru ETF? As it will always be less than market price because of teh expense cost incurred?
It will be a lot easier to sell when compared with gold coins because when you go to sell a gold coin the jeweler usually deducts anywhere from 2 – 5%.
Hi Manshu,
I am new to Gold ETF. I want to buy Gold ETF units. I have a demat account in Shriram Insight. So How can I buy the gold ETF funds from there. Is that similar to normal equity shares kind of thing.
Please reply me for the same
Yes, buying gold ETF is exactly the same as buying a share, so if you have done that before you can do this the same way. Just find the code for the Gold ETF in your system and you can buy it the same way you did the stock.
Is it advisable to Have SIP in gold ETF , if one is looking to build this asset for future purpose as well as return ?? What is difference & more advisable to invest in terms of returns i.e Gold ETF v/s Gold Mutual Fund ??
I have heard its better to have term insurance & investment separately rather than ULIP plan having both this together..Any specific reason for same ??
Hi Manshu, Your blog is very informative and a guide to many small and early stage investors like me. I am planning to invest 60- 70 Krupees every month and out of that I am planning to buy 2gms gold every month and 1/2 kg silver per anum. And may go for some IPOs rarely. So as an early stage investor my annual investmentdoesnt cross 1 lakh and I maynot go for trading the shares very rarely. Right now I dont hve any Demat and Trading account. So based upon my portfolio which tading account you suggest me now.
Please let me know your suggestion ASAP, coz I am planning to execute my idea from this newyear 2011.
Thank You,
Rama Sudheer
So, you’re talking about opening a trading and demat account? Well, if you’re going to just buy bonds, and gold then with your amount I don’t see a need for you to open an account because you can buy bonds in physical form, and for gold coins you don’t need an account anyway.
I hope I understood this correctly Rama – please leave a comment if I didn’t.
I dont want to buy gold coins, I want them in ETF only because I want to transform into cash at any point of time. And there is a chance for me to trade aswell (in the future), so out of your experience, for a early stage investor which account would yor suggest?
SBI is something that’s cheap and reliable so that might be a good bet for you. Although there are several other trading and demat accounts I feel that your trading is not going to be much, so you are not likely to run a lot of commissions, and may look into SBI.
You can always check with the bank that you currently have a relationship as well because then that makes things a little streamlined and easier to manage.
Dear Rama,
We would suggest to look at E-Gold and E-Silver as an option if you are looking for a better option to INVEST and also TRADE in FUTURE. They are traded on NSEL and are 100% backed by underlying Gold or Silver. Their rate are more near to the Physical Gold and Silver price. You can buy as low as 1 gm of Gold and / or 100 gm of Silver, which is the minimum qty available for sale/purchase. You need to have a Demat account to Store and trade.
Unlike GOLD ETF, It doesn’t depends on other factors like how much expenses the fund is charging investors, and the tracking error, which is how efficiently the fund is tracking gold prices.
It is more like direct investing in Gold and Silver but in Electronic form, easier to keep, safe and trade.
hi pls tell me how can i, invest 1st time in ETF gold,………..
You can buy an ETF just like you buy any share Anurag, so if you have a demat, and a trading account through which you buy shares, you can use the same thing to buy ETFs also.
Somebody mention that 11-15% is straight loss if buying gold jewellery and selling thereoff. What abt Gold bar , buying and selling? Still when you go in Mkt to sell, 11-15% is deducted??. Pls adv. I have another question, i am NRI, can i go for Gold ETF sitting o/seas.
Yeah, people who have tried to sell gold coins have reported that the jewelers have told them that they’d have to deduct about 5%, so you can expect the deduction to be somewhere in that range. Also, it’s far better to be able to sell the gold coins from the jeweler you bought them originally from, and check the terms of sale at the time of purchase. Since this is not jewelery things like making charges etc. are not deducted viz. probably were the 11 – 15% figure come from.
I think NRIs can invest in Gold ETFs, so you can check your trading site Deepak to see if they show up in the list of securities you can buy or not.
Hi Manshu, tks for your advise. ForETF, i chked but seems i am unable to locate that whether sitting here i can open a demat or a trading a/c as i dont have one. Cannot do it just fm NREa/c. I probably need tovisit India for the same. Pls adv.Rgds
Deepak – I don’t have any experience with this, but what I’d recommend is for you to to go to the website of your bank say HDFC or SBI or wherever and then they have forms where NRIs can fill up info to request account opening, and their representative gets in touch with you. So, do that and see how it goes, at least this way you will not have to wait till you’re back home.
i have no account at broker, i want to invest some money in gold etf, how i can do it.
Sravan – It is necessary to have a Demat and trading account in order to buy a gold ETF, so you will have to open that first.
Hi Manshu
Your response to various questions regarding gold ETFs is very clear & impressive.
You are giving clear a picture and will be usefull for many investers.
Thanks dear, God bless you
Madhu
Wow Madhu! Thank you so much for your kind words, and taking the time out to write this comment!
i have no account at broker, i want to invest some money in gold etf, how i can do it.
There’s no other way Ajit.
Can an NRI invest in GOLD ETF FUNDS. Please let me know.
Yes Conrad – they can invest in gold ETFs.
Thanks Manshu,
After reading all the comments, I have learnt a new chapt GOLD ETF FUNDS
GREAT JOB !!!
Thank you for your comment Ratan – your thoughts are much appreciated!
Hi
If I Buy Gold bar of 10 gms or any coin.Is there any service charge has to be paid.
VAT will be charged Harish.
Hello,
I just want to know today when market closed HDFC GOLD ETF increased more then 50 points on NSE, where as Reliance Gold decreased by 2-3 points.
Why so??? Gold rate is common for both the companies then why increase for one and decrease for one.
Thank,
Sanjay
Shouldn’t normally happen. I’ll check that later to see if I can find the cause, don’t know what happened right now.
Thanks Manshu, I will wait for your reply
Sanjay
Hi Manshu,
I have one query,
I have brought Gold Bees ETF shares. I am not getting why there is a difference between Gold Bees and HDFC Gold Exchange Traded Fund. because I found that Gold ETF had 1937 and HDFC Gold Exchange Traded Fund has 1975. Why this much of difference
HDFC gold ETF started out much later so that base might be different. There was another comment yesterday or day before talking about HDFC gold ETF rising sharply in a day, but I am a bit busy at the moment, and didn’t get an opportunity to look into it.
Hi manshu,
I am interested to take gold ETF’s. I have a demat account in HDFC bank. On seeing of earlier discussions and threads got to know Goldbees is best one.But i didn’t Goldbees.
can you plaese explain it?
From which organisation can i start trading on Gold?
Is there any service charge/VAT when buying gold ETF?
please clarify my doubts…
Thnks
krishna
GOLDBEES might have a different name or code on HDFC platform. Search for Benchmark Gold ETF and you will find the code. There is no VAT on buying ETFs. The charges remain the same as if you were buying shares.
Hi I want to invest in gold ETF (SIP) which is the best fund to invest for long term?
Did you read the post krishna?
Hi manshu,
I tried to buy GOLDBEES from icici-direct. I tried for a search with GOLDBEES in icici-direct but could not find one. But I was able to find ‘BENCHMARK GOLD EXCH TRADED SCH’ using the stock code of GOLDEX.
Just want to know whether GOLDEX is the same GOLDBEES etf. Does the stock code vary b/w different companies.(ie ICICI, Geojit etc..)?
Yeah, that sounds like the same thing, and diff companies do have diff codes.
HI
TELL ME BEST ETF FUND , WHERE I INVEST IN COIMBATORE
THANK U
There is no such thing as a BEST ETF FUND! What are you trying to invest in – gold?
I am new to Gold ETF. I want to buy Gold ETF units. Just now I’ve started demat account thru sharekhan. I am confused whether to buy Shares or gold etf.I don’t know abcd of both. Can you suggest the best? I want to invest for some 5 years .I should get a good return after that.
Please reply me for the same
Mercy
Since you a novice, equity investing is definitely not for you. Invest in a good large cap mutual fund using SIP. As fas as investing in gold is concerned, never over-do. You may hold a maximum of 20% of your total investment in gold. Not more.
Hi Masusha,
Good information about Gold ETF
Hi Manshu,
Very new to ETF’s gathered good info from this blog. You have compared expense ratios for some companies. What about Reliance gold ETF which ended yesterday. You thoughts and suggestions on this. I heard from a person from Kotak that they are going to launch GoldETF SIP very shortly.
Please give us your suggestions.
Many Thanks,
Srihari
Here is a full post I did on Rel Gold MF Srihari.
http://www.onemint.com/2011/02/17/thoughts-on-reliance-gold-mutual-fund/
It should answer your questions, and if you have any more then you can leave a comment there.
what is the stock code for Gold BeeS ETF from Benchmark Funds? In ICICI Direct GOLDEX is there. are both the same?
As per one of the comments here GOLDBEES is the code. But I was unable to find the same in ICICI Direct website.
GOLDEX against which it says BENCHMARK GOLD EXCH TRADED SCH is Gold BeeS Sanjit.
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