With staggering returns of more than 20% per annum for last 5 years, Gold has become a hot investment opportunity. Mutual funds in a bid to en-cash this opportunity have launched gold ETFs and gold mutual fund schemes one after the other. On the last count there are 12 gold ETFs trading on exchanges and two more waiting to be listed. No doubt with so many options around and little differentiation retail buyers are bound to ask the question – which is the best gold ETF?
Before answering this question let us see the 14 Gold ETFs in India.
|Gold ETF Name||Launch Date||1 Year Return||Expense ratio||Comments|
|Axis Gold ETF||Nov-10||34.05||1|
|Birla Sunlife Gold ETF||May-11||—||1.44||Highest Expense Ratio|
|Canara Robeco Gold ETF||Mar-12||—||—||To be Listed|
|Gold man Sachs Gold ETF||Feb-07||33.97||1||Oldest and most Liquid|
|HDFC Gold ETF||Jul-10||34.35||1|
|ICICI Gold ETF||Jul-10||34.12||1|
|IDBI Gold ETF||Nov-11||—||—|
|Kotak Gold ETF||Jul-07||34.62||1|
|MOST Gold ETF||Mar-12||—||—||Details Here|
|Quantum Gold ETF||Feb-08||34.61||1||1 Unit = half gram of gold|
|Reliance Gold ETF||Nov-07||34.6||1|
|Religare Gold ETF||Feb-10||34.62||1|
|SBI Gold ETF||Apr-09||34.73||1|
|UTI Gold ETF||Mar-07||34.64||1|
One important feature of ETFs liquidity .i.e. sells when you want to sell with negligible spread. Spread means the difference between buying and selling price at the moment.
Below is the graph showing the turnover of all listed Gold ETFs on Bombay Stock Exchange (BSE) on April 13, 2012.
There are just two gold ETFs with turnover more than Rs. 50 lakhs. Turnover means total value of ETFs bought or sold on a particular day. So if the turnover is low it means that you won’t be able to exit your investment when you want at the right price. If it’s really urgent for you to exit you need to sell it at a discount. And this brings us to the second point. You would note that since the turnover is low the relative price fluctuation would be higher.
It makes all the sense to go with gold ETF offering highest liquidity and the winner in this category is “Goldman Gold ETF” earlier known as “Benchmark gold ETF”.
So go ahead and invest in gold through gold ETFs this Akshaya Tritiya on April 24.