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.

{ 11 comments… read them below or add one }

Srini May 6, 2012 at 9:55 am

I am beginner trying to invest in ETFs. I was trying to invest through ICICI Direct but i cant see the ‘Benchmarks’ ETF listed there. Can anyone let me know what the problem is? or Should I be not doing it through ICICI Direct?

thanks…

Reply

Sridhar May 7, 2012 at 7:10 am

Hi Srini,
The Benchmark ETFs were acquired by Goldman Sachs, so their names have changed.
So Benchmark Gold Bees is now called GS Gold Bees. So try to check for other names or cross check with the code on NSE or on Economic Times to be sure about the right ETF. I believe ICICI Direct should have all ETFs.
Hope this helps.

Reply

shaleen shivliha May 15, 2012 at 10:16 pm

Hey Manshu,
A couple of days back was wondering of how to invest with less paperwork/ hassles. Read your article and must appreciate your knowledge on Gold ETF. Since, new to this and i am bound to ask some basic queries that are difficult for me to envisage.

1. How can one compare/ relate the profits in case physical gold to the tune of One Lac (Indian rupee) is purchased from Tata Tanishq with that of Gold ETF (from any of the providers) of same amount.

2. Is there any kind of tax savings/ rebate under 80 C for Gold ETF.

3. How is FD not better than this??

Just laugh out loud if u find these questions not of a repute to qualify your answer…:) Though, Waiting for reply…

Reply

Manshu May 17, 2012 at 4:35 am

1. You have to find out how much they are selling the gold coins for and what will they deduct when they buy it back. When you find that out you will know the premium they charge and the deduction they make while buying and selling and that will show you the difference because that’s what the difference is going to be.

2. No.

3. FD and gold are two different types of assets. In the past few years gold has given much better returns than fixed deposit but the risk with that is if the price of gold goes down, then the gold ETF may even give you negative return and this is usually not possible with fixed deposit.

Reply

Shil June 20, 2012 at 8:54 pm

Dear Manshu –

Many thanks for your contribution. According to you which is the best gold ETF to invest in currently and why?

Thanks,
Shil

Reply

Sandip Ranjan July 20, 2012 at 1:07 pm

Good Article Mansu…………….!!!

Great help for all new investors…..!!!

Reply

Vikas November 26, 2012 at 12:29 pm

Nice Article. Many thanks for the information. Would you be able to share the latest results over the past 12 months from Oct 2011 to Oct 2012?

Reply

Sujeet January 16, 2013 at 11:29 pm

Hi Manshu,

Hoping to see your opinions on the Gold ETF performance… been about a year since this post.
Am more keen since it would now include HDFC Gold ETF (am somehow biased in favour of the HDFCMF generally).

Best regards,
Sujeet.

Reply

j.sudhanam January 20, 2013 at 11:54 am

Thanks a ton for the good work.
Best wishes & Regards.
jsk

Reply

JOHN DE BRITTO.K January 25, 2013 at 3:32 pm

Just i want to invest

Reply

JOHN DE BRITTO.K January 25, 2013 at 3:33 pm

Good for the best investment

Reply

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