What is Gold ETF and how to invest in it: Gold price had been soaring till recently and now it has steadied. Many people are wondering whether they should invest money in it now. Gold is definitely an excellent thing to put your money in to safeguard against financial emergencies – they can be personal or national or even global. For instance, corona pandemic created a global financial emergency. Idea is that it will keep your money safe and even grow your money, depending on the situation. However, buying jewellery is not the right way as it includes making charges and that reduces your profit when you go to sell it. That is where gold ETF comes in. You pay for the yellow metal only and you get profit as per prevailing gold price that day.
Gold ETF is an excellent instrument to diversify your portfolio that may include stocks, bank FDs etc. So, know here about Equity, Gold and Debt ETFs
Just remember a diversified portfolio can earn bumper profit for you.
Benefits of Exchange Traded Funds of ETFs in a portfolio
What is ETF and how to invest in this?
What is Gold ETF and how much should be invested in this instrument
Why to invest in ETFs?
How to distribute debt-equity ratio in your investment portfolio
What are the benefits of including ETFs in portfolio
When is the right time to invest in Gold ETFs
How many types of ETFs are available and what are the advantages and disadvantages?
Zee Business Guest Chintan Hariya, Head – Product Development and Strategy at ICICI Prudential clears all doubts
It is important to keep good funds in the portfolio
Avoid over-diversifying the portfolio
Decide the funds depending upon your financial goals
Over-diversification could have an impact on your investments
Over-diversified portfolio is difficult to manage
What is ETF?
ETF is Exchange Traded Funds
Many types of securities are there in ETF portfolio
The returns from ETF are similar to index funds
They are listed in stock markets and can be purchased or sold
Benefits of ETF
It is a viable option for direct trading
No need to pay advisory or management fees
ETF also have a relatively lower tax outgo
ETFs also have low cost of holding
You get a an ETF certificate just like a stock certificate
Types of ETF
What is Gold ETF?
Gold ETFs are Gold Exchange Traded Funds
You can invest in this like equity
The price of Gold ETF depends upon the price of Gold
Facility of one time or instalments available
Higher expense ratio than Equity ETFs
Higher returns possible
Much better option than investment in physical gold
Very few options available currently in this instrument
AMCs cab soon bring new debt ETFs
Expense ratio in debt ETF is very low
Expense ratio at 0.0005 per cent
Bharat Bond ETF – 0.0005%
Low expense ratio in Equity ETF
Expense ratio around 0.05%
Smart Beta, multifactor ETF has slightly higher expense ratio
Smart Beta ETF has 0.15 to 0.43 per cent expense ratio
Why ETFs not so popular option?
Not much awareness about ETFs among investors
They prefer to invest indirectly in markets
Direct trading is a better option
They score less in comparison to equity mutual funds
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ETF suitable for Whom?
ETFs suited for long duration investment
Good returns on back of lower cost
Facility of ETF liquidity also available