Investing in gold through mutual funds

Exchange-traded funds (ETF) are a relatively new species of mutual funds in india. They provide a cost- efficient and secure way to access the gold market. Similar to owning the mutual funds units of a diversified equity fund, units in an ETF can be easily bought or sold. What’s more, one may trade on them like any other stock on the exchange through terminals across the country.

What is an ETF?
ETFs are essentially funds that are listed and traded on exchanges like stocks, on a real-time basis and at a lower cost than many other forms of investing.
An Elf is a basket of stocks that reflects the composition of an index such as S&P CNX Nifty or the BSE Sensex. The Elf’s trading value is based on the net asset value of the underlying stocks that it represents. Think of it as a mutual fund that you can buy and sell real-time at a price that changes throughout the day. There is no need to separately fill a form. Just a phone call to your broker or a click on the net and you can invest.

What is a Gold ETF?
Gold ETF (GETF) offers investors an innovative, cost-efficient and secure way to access the gold market. it is intended to offer investors a means of participating in the gold bullion market without taking physical delivery of gold, and to buy and sell on National Stock Exchange (NSE). Through a GTF, smaller amounts can also be invested to accumulate gold at different price levels with relative ease and comfort.
Stability, reduced volatility in a well-diversified portfolio, inflation- plus returns, convenient investment vehicle to get tax-efficient exposure, are all good reasons to invest in GETFs.
The investment objective of a GETF is to provide returns that, before expenses, closely correspond to the returns provided by the domestic price of gold through physical gold.

Tags: ETF, Exchange-traded funds, GETF, Investing in gold, MUTUAL FUNDS