Why Gold ETFs continue to shine across all investment climates

For a country of over 1.3 billion people spread across 28 states big enough to rival some European nations in size, India has shown remarkable unity in one aspect: digitisation. The last few years in particular have been underpinned by digital adoption at a scorching pace. Consumers are as adept at buying groceries online as they are in investing their money online.

Among the more popular investment instruments that can be bought electronically are Gold Exchange Traded Funds (ETFs). According to the World Gold Council, “Strong first-quarter ETF inflows fuelled a notable H1 recovery”. So what are Gold ETFs and why are they favoured by retail investors?

Gold ETFs are a basket of investments that track the domestic physical gold price and invest in gold bullion. They are units, in electronic or paper format, that represent gold in its physical form. One Gold ETF equals 1 gram of physical gold of 99.5% purity. It forms an excellent alternative to actually storing the precious metal at home or in bank vaults.

Among the biggest benefits of investing in this vehicle is that even small retail investors can set aside their savings and buy as little as one unit or one gram of gold. Just like any equity stock of any company, even Gold ETF is listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). Such ETFs can be bought or sold at prevailing market prices on click of a mouse or a tap on the smartphone through a variety of trading apps.

Whereas the entire process is transparent, the costs associated with it are also low compared to investing in physical gold. Moreover, unlike pricy jewellery which may attract different prices across India, the price of one unit of an ETF is consistent around the country.

Indeed just like any other investment vehicle, gold prices, too, are subject to market risks. But what sets it apart is the ease with which transactions can be carried out from the comfort of one's homes with an assurance that the process is transparent and real-time. There is no risk of theft either and these investments can be accepted \as collateral for loans. If you haven’t tried this option yet, log on to your demat account and start your Gold ETF journey with just one unit of ETF.

Moneycontrol journalists were not involved in the creation of the article