Tata Gold Fund: Gold ETF for Indian Investors

Tata is coming out with a new fund offer for its own gold ETF – Tata Gold Fund. The new units will be priced Rs.100, and trade in stock exchanges like other ETFs.

The Tata Gold ETF will hold physical gold or gold related instruments as the majority of its holdings. They plan to hold at least 90% of their assets in gold, and the remaining in money market instruments, bonds, securitized debt, and other debt instruments permitted by SEBI.

This is a passive fund, which means that the fund manager will not try to beat the returns of gold, but try and replicate it for the most part.

The recurring expense ratio of the fund is expected to be 2.50% of average weekly assets for the first Rs.100 crore. This is similar to what most other gold ETFs in India have to offer, with the exception of Benchmark mutual fund’s gold ETF, which charges an expense ratio of 1%, and Quantum gold fund’s gold ETF, which charges an expense ratio of 1.25%.

The minimum application amount during the Tata Gold NFO will be Rs.10,000 for retail investors. It is worthwhile to keep in mind that since this is a mutual fund NFO, and not a stock IPO, investors shouldn’t think about any sort of listing gain from this.

If you were looking for a gold ETF, then there is one more option for you to invest in. This fund is not really all that different from other gold ETFs that hold physical gold, so I wouldn’t really be all that excited about its launch.

I can only hope that all these new gold ETFs that are getting launched in the market bring down the fees that mutual funds charge investors. At 2.50%, this is quite high compared to the western gold ETFs, and one can only hope that time and competition brings this charge down.

Disclosure: This is just a summary of the new fund that will be launched, and not a buy or sell recommendation.

11 thoughts on “Tata Gold Fund: Gold ETF for Indian Investors”

      1. Hi Manshu,

        Thank you for your reply Sir.

        I had one more question to it and that is,

        1. When NAV is after expenses then why should we worry about expenses?
        2. Can you also clarify some doubts about ULIP?
        Products are different but acts same.

        1. NAV is Net Asset Value and is calculated by subtracting fees and expenses from the total value of gold or other assets of a fund and dividing it by number of units. Therefore, higher fees will reducethe NAV and what you as an investor ultimately gets.

          What question did you have about ULIPS? I will try and answer it.

  1. Hi,

    The information provided about ETF is very good through out all the articles. I have few queries to make it clear & better for me, before i step into ETF trading 🙂

    I like to know how the Expense Ratio factor is applied to my investment. Are they going to charge this per annum/monthly/weekly basis. Please could you tell with some examples like if i invest 15000/- how much I need to pay for better understanding.

    Thanks in advance

    1. The expenses are usually annualized, and charged over the average net assets of the fund (because assets are not constant throughout the year) for the year.

      1. Hi Manshu,

        Thanks for your response. Based on your reply my understanding is they will charge the expense ratio annually and you mean assest which I hold is what they consider in the end of the year to calculate.(for eg., if assest worth 60000k in the year end, if 1% expense ratio, so I will pay RS600)
        Please correct me if I am wrong


        1. Hi Ritesh, The fund will consider all their assets, not only the ones you hold. So, if you and I are both investors in it, the fund will calculate the expenses based on the total of both our funds. But the expenses will also be spread across our investments so we will bear it based on our allocation. Bear in mind though, this is simplification of the real process just for our understanding process.

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