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Gold Exchange Traded Funds

Gold Exchange Traded Funds:

In July 2022, Gold Exchange Traded Funds (ETFs) witnessed a net outflow of Rs 457 crore as investors parked their money in other asset classes as part of their portfolio rebalancing strategy.

  • This was in comparison to a net inflow of Rs 135 crore in June 2022.
  • Gold Exchange Traded Funds which aims to track the domestic physical gold price, are passive investment instruments that are based on gold prices and invest in gold bullion.
  • Gold ETFs are units representing physical gold which may be in paper or dematerialised form.
  • One gold ETF unit is equal to 1 gram of gold and is backed by physical gold of very high purity.
  • They combine the flexibility of stock investment and the simplicity of gold investments.
  • There is complete transparency on the holdings of an ETF.
  • Gold ETFs have much lower expenses as compared to physical gold investments.
  • No wealth tax, no security transaction tax, no VAT and no sales tax is levied on ETFs.
  • There is no fear of theft as ETFs are safe and secure as units held in Demat Account of the holder.