Gold ETF in India – Performance and Volumes in Last Year

by Manshu on August 16, 2011

in ETF

It has been over a year since I wrote my best gold ETF in India post, and since then the number of gold ETFs that are present in India have almost doubled.

There are a total of 11 gold ETFs currently present in India, and 4 out of these 11 were launched within the last year. The big change in this space has been the reduction in the expenses that sponsors charge their customers, and now you can see that almost all of them are on the same footing.

You will still see some performance difference in them because every gold ETF holds a small sum of liquid investments other than gold, and that makes a small difference on their returns.

In this post I will look at the performance, volumes, and expense ratios of all the gold ETFs currently traded in India. I couldn’t find the expense ratios of some of these funds, and instead of waiting out I have published this post now, and will update it as and when I find the information.

First up, here are the names, NSE symbols, 1 year returns as on August 12 2011, and their turnover on the same day.

S.No. Name NSE Ticker 1 Year Return as on Aug 12 2011 Turnover in Lacs as on Aug 12 2011
1 Quantum QGOLDHALF 41.07 37.11
2 UTI GOLDSHARE 40.84 341.83
3 SBI SBIGETS 41.26 397.37
4 Axis AXISGOLD 15.24
5 HDFC HDFCMFGETF 288.75
6 Relianace RELGOLD 41.08 440.82
7 Religare RELIGAREGO 41.95 9.9
8 Benchmark GOLDBEES 40.19 5,490.42
9 ICICI Prudential IPGETF 14.17
10 Kotak KOTAKGOLD 40.43 1,042.38
11 Birla Sunlife BSLGOLDETF 1.64

Regular readers know that every gold ETF in India holds physical gold equivalent to the number of units that are issued in the market, and their price is thus dictated by the price movements of gold.

Since all these ETFs have the same underlying asset, the price movement is also quite similar.

Here is a chart that gives you a better visual of the performance in the last 1 year. Some of these funds are less than a year old, and that’s why you don’t see any corresponding data against their names.

Gold ETF Returns for 365 Day Period Ending Aug 12 2011

Gold ETF Returns for 365 Day Period Ending Aug 12 2011

From this chart, you see that the performance are pretty close although Benchmark Gold BeES has done the worst this time period, and Religare has done the best.

When I last looked at this type of data – GoldBeES had done better than all other competitors for a 2 year period, but in the last year everyone else has done better than them.

I took a look at the 2 year performance to see if that confirms this or not. Here is how the 2 year returns chart looks like.

Gold ETF Returns for 2 Year Period Ending Aug 12 2011

Gold ETF Returns for 2 Year Period Ending Aug 12 2011

This chart shows a different result from the first one, and to my mind – this goes to show that there is very little difference in terms of these funds performance wise.

Next up, I wanted to see what the expense ratios were like, and how much each fund was charging its customers for maintaining the fund. The tricky part here is that each fund lists down the expenses it will charge in its offer document, and then revises these charges periodically. The revised rates should be found on their website because the offer document itself is not revised, and that still contains the old rates.

When you see blanks in this table that means that I couldn’t find the updated expense charges on their website, and didn’t want to use what’s given in the scheme information document.

Here is the chart that shows that information.

Name NSE Ticker Expense Ratio
Quantum QGOLDHALF  1.25%
UTI GOLDSHARE
SBI SBIGETS
Axis AXISGOLD
HDFC HDFCMFGETF  1.00%
Relianace RELGOLD
Religare RELIGAREGO  1.00%
Benchmark GOLDBEES  1.00%
ICICI Prudential IPGETF
Kotak KOTAKGOLD  1.00%
Birla Sunlife BSLGOLDETF

Finally, let’s take a look at the volumes of these gold ETFs because you want your fund to be as liquid as possible so it isn’t impacted by what a few big players may do. The higher the volumes, the better it is.
Here is a chart that shows the turnover of all these funds on August 12 2011.

Gold ETF Turnover in Lacs on Aug 12 2011

Gold ETF Turnover in Lacs on Aug 12 2011

This is where you see the staggering difference – Benchmark is just way more popular than anyone else, and a lot of that is due to the fact that they were the oldest gold ETF, and even when they had very little competition – they kept their expenses low, and gained in popularity with investors.

Conclusion

It has been interesting to see this space evolve over the years, and see so many competitors come in, which is always good for the customer. I’m fairly certain the expenses wouldn’t have come down to 1.00% without Benchmark setting that precedent and other companies coming into the space and competing. It feels just a matter of time when someone lowers the expenses to less than a percent, and market their fund.

About the choice of funds themselves, although the performance data doesn’t suggest a clear winner – the volume data shows Benchmark and Kotak to be clear leaders of the pack.

{ 99 comments… read them below or add one }

Vimal Raj August 16, 2011 at 11:43 am

Anshoo,

Thanks for an another nice article related to Gold ETF. This is really helpful to the people who wanted to invest in Gold, but if you provide the liquidity flow in each ETFs, it would be more useful to select the proper ETF to invest in.

Regards,
Vimal Raj

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Manshu August 16, 2011 at 6:57 pm

By liquidity flow you mean volumes right? That’s what the last graph is.

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CA Karan Batra August 17, 2011 at 12:49 am

Very informative post Manshu

With the price of Gold on an uptrend and the negative news that came from the US last week, more and more investors are now expected to invest in gold which may bring in some more players in the market leading to healthy competition which was earlier missing.

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Manshu August 17, 2011 at 6:06 am

Absolutely, space is heating up, and it would be great if expenses come down a little more.

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Vimal Raj August 17, 2011 at 3:01 pm

Hi Anshoo,

A small query. When you talk about Expense ratio, how it will be impacted the investors in the Equity market? For an example, if I’m buying 1 unit of GoldBees for 2500 and selling for 2600, I’m in a profit of 100. Where is the Expense ratio impact here? I’m a novice on this, so don’t mind if it is a very basic question.

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Manshu August 18, 2011 at 4:41 am

Vimal – It’s Manshu not Anshoo 🙂

The expenses are deducted from the fund and you will never feel its direct impact. The NAV will reduce to the extent of the expenses and then the price will adjust to the NAV. The market price you see is what you will get, so you don’t have to worry about this after you carry out the transaction. Whatever price you see is what you get minus brokerage of course.

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Vimal August 18, 2011 at 8:19 pm

I’m extremely sorry for that Manshu 🙂

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Manshu August 21, 2011 at 10:42 pm

No problems – happens a lot and I don’t mind it at all, but I have a feeling you will become a regular commenter so just thought of leaving a note 🙂

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vijayshankar August 17, 2011 at 3:06 pm

Hi Manshu,
I want to thank you for informative posts you are providing regarding Gold ETFs.But i have one question.Is it the right time to invest in Gold?I understand that since this is time of economic uncertainity many people might invest in gold and prices may go up.But i am not sure with gold prices so high is it prudent to invest in gold right now?
Thanks in advance

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CA Karan Batra August 17, 2011 at 8:06 pm

@ Vijayshankar

Gold Prices are no doubt high at this point of time but if you compare the prices of Gold in 2011 to the prices of Gold in 1980, its still cheap in 2011.

If if adjust the price of Gold with Inflation, the price of Gold in 2011 shd be $2100 whereas it is only $1700.

There would certainly be some more upmove in the prices of gold in the International Market in the coming year

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Manshu August 18, 2011 at 4:38 am

I have been staying away from gold for the last two years as I’ve been uncomfortable with the price rise, and especially the rationale behind the price rise. In these two years I’ve been proven wrong, but I’m still staying away from it. So, that’s my opinion which I’ve written in a few posts as well, but as other commenters have pointed out I’ve been wrong about this all the time so there is no reason why I won’t be wrong about it in future as well.

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SURYA August 18, 2011 at 2:02 pm

Hi Manshu,

This is a great article and has helped me with lot of informaton and thanks a ton 🙂

One question however is would it be wise to invest in the ETF’s now when almost all the ETF’s are at a 52 week high.

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CA Karan Batra August 18, 2011 at 6:12 pm

Hi Surya

Market Timing is something which very few people are able to time perfectly.

Prices may come down a few rupees but no-one knows what would be the right price to buy. So it is always advisable to buy in small quantities and do averaging.

Waiting for Manshu’s views on the same

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Manshu August 21, 2011 at 10:54 pm

Hi Surya,

About two years ago I wrote a post about how gold prices look so high, and they are headed towards bubble territory, and prices kept rising in those two years and I’ve been proved wrong in being cautious about them. My personal opinion about it hasn’t changed though some very smart people own gold right now. I think it would be wise for a regular investor not to be dazzled by this recent price rise, and have limited exposure to gold, not more than 5% or at max 10% of their portfolio. Stick to the key tenets of diversification, own gold, but don’t own *only* gold. As for timing, no one can really time the market, and if you are interested in gold, then I’d say buying gold periodically makes sense.

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Steven Fernandes August 18, 2011 at 5:08 pm

Hi Manshu,
very detailed andnice article

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ram August 19, 2011 at 1:51 pm

Hi Manshu,
Great insights. Nice article for the bigginers who want to understand this area better. Can you direct me to the links to understand more about Gold ETFs. Can they be traded like open ended MFs? or any restrictions around this. please let me know.

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Manshu August 21, 2011 at 10:33 pm

Hi Ram,

Yes, they can be traded on a stock exchange like stocks. Here is an earlier post I did which should answer the basic questions.

http://www.onemint.com/2009/10/23/what-is-an-etf-2/

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Ram August 24, 2011 at 12:21 pm

Thans a lot Manshu. Quite useful info.

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Sanjeev kUMAR August 20, 2011 at 5:02 pm

I want to know ,IF I WILL BOOK Rs 10 lacs in PHYSICAL GOLD IN CURRENT RATE THROUGH SBI GETS ,WILL IT POSSIBLE I WILL PAY THE WHOLE AMOUUNT OF RS 10 LACS IN 180 MONYHLY INSTALEMENT and what will be the rate of interest.

Will i can get physical gold after paying Rs 10 lacs with interest.

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Manshu August 21, 2011 at 10:16 pm

If understand this comment correctly – you want to know two things.

1. Can you lock into a price right now, and continue buying gold at that price even when the price of gold goes up?

No, you can’t do that.

2. Can you get physical gold after buying GETS?

No, you can’t do that either. Let me know if my understanding is correct, or you want to know something else.

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jayprakash August 21, 2011 at 5:09 pm

Informative article, provides basic knowledge which new investor need.
I didnt know anything about GETF but after going throgh the article now
I know every basic things related to GETF.
Thanks.

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Manshu August 21, 2011 at 9:55 pm

Good to know that – thanks!

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Abhijeet August 22, 2011 at 9:22 pm

Hi Manshu,

Thanx a lot for this article. Very informative & useful.
I’m thinking of investing in Gold ETF for a time period of 6-10 months.
As its for short period, should I buy in small quantities or opt for lumpsum investment?
Also which ETF you think will be the most suitable?

Regards,
Abhijeet

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Manshu August 24, 2011 at 5:25 am

Hi Abhijeet

As far as ETFs are concerned, Kotak or Benchmark are ahead in this comparison. However, I don’t know the answer to whether SIP or lumpsum will be better in the time frame you are mentioning.

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SREENIVAS LANKA August 24, 2011 at 3:05 pm

Dear Manshu,

Great article & very good information.

I have a Demat account in SBI. I want to invest in Benchmark Gold Bees. Please tell me the procedure. I want to invest monthly Rs. 2,000/- through online. Is it possible ? Please send the details to my email id : srinivasl2003@gmail.com.

Please tell me differences between SBI GOld ETF (22 – 08 – 11 to 05 – 09 – 11) and Benchmark GoldBees. Which is the best for middle class employees.

Thanks

Sreenivas

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Manshu August 25, 2011 at 1:17 am

The way to do that is to buy them like you buy shares – have you ever bought shares, you can buy an ETF in the same manner.

Also, what you are referring to is a gold mutual fund not a gold ETF – you can read my new post on it to understand the concept and the difference between different instruments:

http://www.onemint.com/2011/08/24/sbi-gold-fund-review/

Also, please keep in mind that gold prices have really zoomed up in the last year or so and it’s not wise to get swayed by the price rise and load up on gold, a portfolio is best when it’s diversified and you don’t end up too much of just one kind of asset.

P.S. Not practical for me to reply to people in emails. And anyway, it’s much more beneficial for everyone if the replies are here since everyone can view them.

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Seemit Mathur August 24, 2011 at 9:45 pm

hi manshu

Thanx a lot for this article. Very informative & useful.
but brother m not so comfortable wid all the tecnical terms ur using here…..but m definately want to invest in gold ETF.so is it possible for u to brief me things abt returns,expenses and where to approach….

thanks brother

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Manshu August 25, 2011 at 12:56 am

Hi Seemit,

Essentially, gold ETFs will move up or down based on the price of gold. If gold moves up then ETF will move up and if gold goes down then ETF will go down. An ETF is like a share so you can buy it from the broker like you buy any share.

In terms of which ETF to buy – from this analysis – Kotak or Benchmark looks good.

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seemit September 19, 2011 at 2:56 pm

thnks manshu 🙂

and is it possible for u to brief a lill more abt expense related to gold etf…..i mean how much the broker will charge….thinks like that….thanks again:)

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Manshu September 19, 2011 at 8:27 pm

Expenses are the same as what you would need to pay if you were buying or selling a share (except there is no STT) So, you will have to pay brokerage commission on the purchase and that’s calculated based on where your account is.

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seemit September 19, 2011 at 9:59 pm

thanks manshu…..one more question….which charge the cheapest brokerage or commission……sorry m new here….n need to know everything abt gold etf….:)

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Manshu September 20, 2011 at 4:29 am

I don’t know about the cheapest brokerage I’m afraid, I have never seen a comparison of the commissions of major brokerages.

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Seemit Mathur September 20, 2011 at 11:25 am

thanks manshu…..one last question..sorry m asking too many questions…m sure thr is definately a procedure for buying gold etf.will u brief abt it a lill….

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Manshu September 25, 2011 at 10:00 pm

It’s the same way you buy shares. If you have ever bought shares you can use the same method to buy ETFs.

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Prad August 30, 2011 at 9:30 pm

(Repost . Please Ingnore earlier one)
Hi Manshu/Karan,

Thanks for this excellent article !! Before reading this article I was illeterate in ETF’s

I have following queries.
1. What is a diffrence between buying gold from a Jweller and buying ETF’s ? In Pune if I buy 10 Grams of gold from Jweller then there is 1% VAT and at the time of selling same Jweller will buy it for 300 Rs less (for 10 Grams) than selling price.

IF we buy ETF then there is 1% of expense ratio + brokerage
In this scenario tell me what is best, to buy physical gold from jweller or Gold ETF ?
Is there any other expense/tax on ETF apart from expense ratio and brokerage??
2. I want to buy around 200 Grams of gold at 24 K to 26 K ( 10 Grams). Do you think gold will come down to this price in coming one month ?
3. What kind of appreciation we will through 2012 in gold ?

Thanks a lot for your time !

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Manshu August 31, 2011 at 4:47 am

Hi Prad,

In my opinion one of the main benefits of owning a gold ETF is that you can buy and sell easily. People buying from jewelers have felt that when they go to sell they have to pay deductions and deal with a lot of crap. That’s absent in dealing with ETFs.

As to your second or third question – I have absolutely no clue about that.

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CA Karan Batra August 31, 2011 at 5:33 pm

Hi Prad

1. I fully agree with Manshu. The main benefit of investing in Gold ETF is that you dont have to go through the hassles of going to a jeweller. All buy/sell/view facilities are available online and you can transact at the click of the button rather tha going to different brokers wh0 give different rates.

2. Another benefit is that with the price of Gold increasing sharply, small time jewellers have also started diluting gold with other metals amd sell it at the price of Gold. However this is not the case with ETF’s

3. The prices of gold are currently linked to the state of the economy of the US. If the US economy does not stabilize, Gold will increase further. However, this is something only time will tell how the US shapes up

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Sridhar August 31, 2011 at 2:24 pm

There seems to be a lot of interest in this post on Gold ETF. Thanks to Manshu for putting up an interesting article with all relevant facts and data, which is very useful for those thinking of investing in Gold ETF.

Since there was a mention of gold prices going up to higher and unaffordable levels, I have a small suggestion. You can consider Q Gold ETF (from Quantum Mutual Fund) where each ETF represents 0.5 gm of gold (half gram). This will make it more affordable. The rate would be mathematically the same, but you can buy in smaller quantities and pay smaller sums within your budget. (e.g since Gold is currently around Rs.2600 per gm, every time you will have to spend so much). This will reduce by half if you opt for Q Gold.

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RANDHIR September 13, 2011 at 12:28 am

Is GOLDEX being shown in ICICIDIRECT.COM is same as GOLD BEES(Benchmark Gold ETF)?

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Manshu September 18, 2011 at 11:01 pm

Yes, Randhir.

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ketan September 20, 2011 at 12:24 pm

just wanted to understand – why is there sucha huge variation in prices of these ETFS? Benchmark adn reliance prices of units are significantly lower (3-4%) then say sbi gets or uti gold. Does one unit in each etf represent a amrginally different quantum of gold? i remember reliance gold was allotted at a par value diferent than 10

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sampreeth September 25, 2011 at 4:26 pm

Goldbees by far seems to be the best among all gold etf’s however, i would like to know which one would you rate second, since i would like to split my gold investment across atleast two etf’s.

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sampreeth September 25, 2011 at 4:31 pm

Goldbees by far seems to be the best among all gold etf’s however, i would like to know which one would you rate second, since i would like to split my gold investment across atleast two etf’s.

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Manshu September 25, 2011 at 9:19 pm

I’ll probably select Kotak or Quantum for the second one.

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Manoj September 26, 2011 at 12:12 am

Hi MANSHU,

Thanks for this informative post.

I am new bee for this EFTs / Share market. I am learning slowly.

My Question is, I heard that compare with gold, the people who invested in silver got more benefits in the couple of years. ( if i am wrong please correct me ).

Like Gold ETFs, is there any way to invest in silver.

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Manshu September 26, 2011 at 12:24 am

You can invest in silver using NSEL’s E-Silver series – there is presently no ETF for that. Silver has risen fast, but it has been far more volatile also. On Friday it fell about 13% in one day, so you have to keep all those things in mind.

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Manoj September 26, 2011 at 1:15 am

Hey MANSHU.

I found e-silver from NSEL ( which is again your post ) for investing on Silver,
All those comments are very useful and i got lots of informations.

To get the Demat account we have to approach the members of NSEL like Karvy, right?
Do we open the Demat account with Karvy or with NSEL through Karvy?
What will happen if Karvy closed?

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Ritu Agarwal September 26, 2011 at 1:10 pm

Thanks for all the useful info Manshu.You are doing a great Job.

Ritu

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Manshu September 27, 2011 at 7:05 am

How nice of you to say so – thank you for your comment!

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pritpal September 29, 2011 at 3:35 pm

Hi Manshu.

Today just gone through all the information provided by u.
It is very much informative and i m continuously reading Ur articles.
I m a beginner in Gold ETF. From your information above, it is clear that GoldBees is the best ETF.
Today the market is not stabilize. nobody knows that what will happen in next even 4-6 months.
My first direct question is:
Should i go for investment right now?
and others are:
How should i invest in Gold. Please choose the best way: is it Gold Mutul fund(SIP) or Gold ETF?
What is the minimum time i should think to keep investing in anyone?

I will request for direct ans rather diplomatic ans.

Thanks
Pritpal Singh

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Manshu October 4, 2011 at 6:24 am

I’m sorry I don’t give any personal advice on this blog because I really don’t know anything about you, and it takes a lot to find out if this is the right option for you or not, or if you already own too much gold, or if you have credit card debt that you should be paying off first etc. All this can’t be done in the comments section of a blog plus I’m not a financial adviser either so that’s the reason I don’t give any personal recommendations here, and you will see many examples of what I’m saying here.

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kokila October 10, 2011 at 7:42 pm

Hi Manshu

I have read all of ur article in the react months and i learned so many information about GOLD eft from your website.

Thanks for spending your valuable time for publishing you knowledge for us.

i was convinced with all the advantages we have with EFT. When i was about to buy one of eft available i just saw eft unit differs from physical gold price on that day. i was able to observe that when physical gold was decreasing , eft prices were increased.

i just have few doubt abt the eft now.

1 who decides the price of particular etf unit price on particular day ( is that decided based on physical gold)
2) whether the eft unit price changes only according to the buying/selling

Hope my question in clear.

Thanks in advance

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Manshu October 11, 2011 at 5:20 am

Price is decided by trading that is in turn based physical price – you may notice that prices move a little unusually or don’t closely track the price of gold in a short period like a day or two but it smooths out over longer periods and will track the returns of gold prices.

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anurag October 14, 2011 at 12:18 pm

Hi,
I want to invest in HDFC GOLD ETF .. Is it good? Shall i buy it.. and generally in Gold fund how much return i expect after 1 year.

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Sanket October 15, 2011 at 4:29 pm

Hi. Will gold ETFs give me better return compared to physical gold? Do they work like mutual funds where a fund can give better returns than the stock market overall?

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Sridhar October 16, 2011 at 10:47 am

Hi Sanket,
You have asked a good question. Gold ETF will give similar returns as physical gold, and variance may be + or – 1%. Gold ETF being a passive fund will only reflect the gold prices and provide equivalent returns. It cannot beat the returns from physical gold, it will only match that closely.
Also remember that Gold ETFs dont track the physical gold prices in India, but it tracks the international gold prices, which get converted to Rs.
ETFs will closely follow international gold prices.

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Sanket October 21, 2011 at 7:37 am

Thanks for the reply Sridhar.

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Rahul October 22, 2011 at 5:07 pm

Excellent writing! Thanks so much. I had been thinking about investing in a gold ETF for quite a while now, and had done some reading over the internet. It was this post which VERY clearly and precisely gave me all the data and I have my decision. Hope to read more of your stuff in near future.

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Manshu October 25, 2011 at 5:14 am

That’s great to hear – hope you subscribed to the email, or added the feed to the reader.

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G Badarinath October 24, 2011 at 6:27 pm

Very much informative for the freshers ..Thanks a lot Manshu

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Manshu October 25, 2011 at 4:34 am

Great to hear that – thanks!

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G Badarinath October 25, 2011 at 11:11 am

Manshu..Can you please let me know few mock trading site names

Thanks in advance

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Manshu October 25, 2011 at 7:21 pm

Try Moneycontrol, Moneysights, Rediff Finance, Google Finance or you could put together a portfolio in Google Spreadsheet and make a tool yourself 🙂

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Ankur Sinha October 29, 2011 at 4:04 pm

Hi Manshu,
First of all thanks for all your helpful advice.
I am planning to start investing in Goldman BEES gold ETF through my broker Angel Broking.
They are giving me delivery brokerage of .03 or 30 paisa in delivery.
which will come some where Rs7.5/- for 1 unit = 2500/-
Is this brokerage OK or i should negotiate with some other broker ?
Thanks
Ankur

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Manshu October 30, 2011 at 10:43 pm

Ankur, I haven’t really ever looked at brokerage charges across broker houses, so can’t say if this is the lowest but the range seems about right.

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dhananjayan April 11, 2012 at 8:06 pm

Hi Manshu

It is excellent write-up and everybody has already said the same.
I have to ask a simple suggestion to Ankur through the blogs here with your permission. If you find my question inappropriate please remove the same from the blog.

Hi Ankur,
I am planning to start trading in commodities and have chosen Angel broking firm as my broker. I am yet to give the documents and open an account.
Please let me know how good are the services with respect to commodities. Also let me know how good the dealers response is to our queries.
I am sorry for using this form inappropriatly. But there is simply no-way of finding this information unless I contact other investors/traders like you.

Regards
Dhananjayan

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dhananjayan April 11, 2012 at 8:07 pm

Hi Ankur,

My mail id is tv_dhananajayan@rediffmail.com

Thanks in advance
Dhananjayan

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Manshu April 12, 2012 at 5:21 am

Hi Dhananjayan – Please feel free to share your email – I don’t have an issue with that.

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Chandrachur October 29, 2011 at 4:25 pm

Dear Manshu,
I think this is one of the best articles on GETF that i have come across, written by an individual. I want to personally thank you for the time and effort that you have put in, for getting these valuable information together. I look forward to see more of your expert opinion and guidance. Is there any forum or group that you are part of, which can accomodate others like us ?

Best,
Chandrachur

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Manshu October 30, 2011 at 10:42 pm

Dear Chandrachur,

Thank you very much for your kind comments – this is my blog, and I write here very regularly, and answer almost all questions individually, so this is the best place to connect if you so desire.

You can subscribe to the blog on email, reader and through FB. I’m on Twitter as well, and as this is my hobby there isn’t any formal forum or anything that you can become member of.

But there are a lot of regular readers and commenters here, and as you read more you will notice an involved and intelligent community here.

Thanks

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Sanal Menon December 16, 2011 at 4:43 pm

Hi Manshu,

Thank you for this article – gained lots of knowledge on GETF and moreover happened to read this at a time when I am thinking of investing in ETF. However with the volatility in the markets and prices slashing drastically (driven by USD hike) whats your say – is this perfect time to invest in gold ?

Thanks,
Sanal

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Manshu December 16, 2011 at 11:32 pm

I have no clue whether this is the right time to invest in gold or not – I’ve personally stayed away from it for the last couple of years or so and have been proved wrong, but I’ll continue to stay away from it even in the future.

My being wrong for 2 years and still sticking to my notion should tell you not to seek any directional advice on gold from me 🙂

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Sridhar December 17, 2011 at 10:10 am

Hi Manshu,
Going wrong according to me is nothing new. Even the so called Gurus and Experts can go wrong. A balanced Asset allocation according to me can help avoid extreme surprises. (e.g. having equities, gold, debt, etc)

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Sridhar December 17, 2011 at 10:06 am

Hi Sanal,
Manshu is absolutely right. Timing the prices is not easy.
However, you should invest a small portion of your saving in Gold ETF. This will ensure that even when prices go up or down you are not affected seriously. The biggest advantage of Gold ETF is that you can buy 1 unit/1gm and gradually accumulate instead of investing lump sums.
Like Equities, Gold is also volatile and moves with international market developments, so invest gradually. Most financial experts advice people to invest a small portion in gold – so dont avoid or stay away like Manshu did, instead take small exposure. This is my personal opinion.

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Sanal December 17, 2011 at 8:07 pm

Thanks Manshu and Sridhar – very valuable and practical insights. Will keep watching this space.

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Raman Chandra Shekaran December 28, 2011 at 12:34 pm

Dear Manshu,
Iam 49 , have some PF Money , i have no investment made till now , have demat account , would like to know from you where and all for a long term investment i should invest say for 2 to 5 to 10 years .,
i am planning to invest this money in
FD = Laxmivilas bank 1-2 years @10.5%
GOLD BEES some money for a long term say 10 years or so ,
Muthoot finance ncd ,
OR ANY OTHER LONG TERM INVESTMENT YOU SUGGEST ,
i would like to have this money to be a safe yet a good decent return of say around 15% as wt ave Please do suggest thanks

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Manshu December 28, 2011 at 11:59 pm

I don’t give any personal recommendations on this blog. Sorry.

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Raman January 23, 2012 at 12:07 pm

Is there any other professional you can recomment

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Manshu January 23, 2012 at 11:02 pm

I’m trying to build a directory of advisors here on OneMint based on people who have been answering questions here and are knowledgeable. You can look at that list and see if you want to contact any of them. (There are just 3 people in that list right now)

http://www.onemint.com/category/directory-of-financial-services-providers/

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Raman January 24, 2012 at 12:19 pm

So kind of you thanks
Raman

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Manshu January 24, 2012 at 8:31 pm

You’re welcome and I appreciate that you left a follow up comment.

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ravi January 10, 2012 at 6:37 pm

Dear manshu,

Nice article and very informative.

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Manshu January 11, 2012 at 2:05 am

Great to hear – thanks!

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Brij January 19, 2012 at 8:57 am

Dear Manshu,

I am new to stock & MF trading. I want to buy gold etf for long term. As far as I have seen from the websites the price of 1g of gold of various companies varied the difference that I felt was as much as Rs 300, quantum was seen cheapest, however the performance of funds did not vary much. Do you think buying Quantum gold ETF would be better option for good investment? Please guide.
Bests

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Manshu January 21, 2012 at 8:28 pm

I have a very detailed post on why these prices differ which you can find here and will explain the nuances.

http://www.onemint.com/2011/02/15/why-do-different-gold-etfs-have-different-prices/

There is very little difference in the returns of the various gold ETFs so you can choose a couple that you are comfortable with. Quantum just appears cheaper because it represents half a gram instead of one gram that the other ETFs do.

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Brij January 22, 2012 at 9:10 am

Dear Manshu,

Thanks for your reply.

It was really helpful.

Bests

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Brij January 22, 2012 at 1:56 pm

Dear Manshu,

I want to buy Quantum Gold ETF or Benchmark , value amount about Rs. 10000/- initially and steady investment periodically. Please guide me which options would be better investment:
1. Monthly or Quarterly regular investment
2. One time investment a half yearly or annually depending on the market rate?

Is there any chance of getting tax benefits in either of the options?
Also guide me if you have better idea for such investments.

Thanks a lot for your time. Your suggestions have always been helpful.

Bests.

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Manshu January 23, 2012 at 11:12 pm

They are both okay, so you can opt for any one of them or combine your investment.

There is no tax benefit in owning gold ETF. Well, I guess there is one that they are treated for capital gains better than physical gold but I don’t think you meant in that way. There is no tax saving opportunity which is what I think you were asking.

Well, for better investment ideas – I’m afraid I don’t give anyone specific investing suggestions or advice and I have another detailed post on why that is 🙂

http://www.onemint.com/2011/07/29/the-trouble-with-personal-recommendations/

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Brij January 25, 2012 at 2:20 pm

Dear Manshu,

Thanx for reply, it was helpful.

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Manshu January 25, 2012 at 9:01 pm

You are welcome – thank you.

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Mahesh February 4, 2012 at 10:24 pm

Dear Manshu,
I am new to this MF/ETF/Stocks.. So first let me appreciate and thank you for making me a literate in this with all your posts. I would like to know how US economy affects ETF prices across the world?

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Surya Maddula February 8, 2012 at 8:27 pm

Hi Manshu,
Very Good Information on Gold ETF’s.Probably the best site,I got after searching alot .
I am planning to invest in GOLD ETF’s monthly with small amount(NOT LUMPSUM 🙂 )
I am very much interesred in subscribing for email updates

GOD BLESS YOU..KEEP UP THE GREAT WORK

Thanks
Surya

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Neethu February 18, 2012 at 11:00 am

Thank you for your relevant informations about Gold ETF and keep going.

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rohit March 10, 2012 at 5:50 pm

want to know if all etf are tracking international prices of 1g of gold why their is price difference that to very significant on a particular day and why it does not match with mcx gold prices/g and if expense ratio being same, is volume traded is the only one to decide which etf is best.any relationship with sensex upward and downward movement of gold etf prices.does any gold etf offer facility to turn gold etf into physical gold at any point of time and that to of what carat and in what form.

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Ramesh March 21, 2012 at 8:53 pm

What will be the impact of proposed duty hike on gold import in 2012 budget on Gold ETFs?
For selling ETFs they must be importing Gold in physical form and paying higher duties.

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Manshu March 25, 2012 at 1:02 am

The direct effect is of course that the gold that they need to import will get more expensive but as to how much it affects people’s appetite for gold is anyone’s guess. I think the gold inflows this year will be less than last year and that’s partly because there won’t be so much price action in it and that will abate demand a bit but then how do you distinguish between demand lowered through that and demand lowered through duty hike.

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Ramesh April 26, 2012 at 8:35 am

it is always a pleasure to get our doubts cleared from you and it prompts us to ask for more!

I learnt that gold etfs follow pricing of New York gold exchange rates. this exchange is closed mostly when Indian stock market is open. Am I right? if so, why the price of golds etfs fluctuate during day time in India?

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Manshu April 28, 2012 at 9:00 pm

The price depends on the gold holding priced in INR based on international prices so that’s the value of the fund. But since this trades, the value will change every second, and will depend on demand and supply and there will be differences in a two day or three day or five day period even. This is true for all ETFs listed everywhere on any asset.

Sometimes you will see the Nifty rise but the US ETF based on Nifty may go down on that day, over a period of time these things will level out on a reasonably good volume ETF. I remember someone leaving a funny comment on the FB page with a screenshot and a funny arrow or something like that and he said Gold ETF or Gold WTF 🙂 Who guarantees my money etc. because he saw that during that point in time the gold price went up while his gold ETF price went down. And that’s in a time period of one or two hours. It was a bit silly and childish so I didn’t respond to him but basically the way these things work you can’t expect the price to match tick by tick second by second and if you don’t feel comfortable doing that then you should buy physical gold.

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Ramesh April 28, 2012 at 10:25 pm

Thanks Manshu, for elucidating ETF marvels and clearing our doubts.

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