Gold should definitely form a part of investors’ portfolio. Apparently Indian investors always had a fancy towards this class of asset. The switching over form physical assets to financial assets for potentially high returns Over the past few months, the popularity of Gold exchange traded funds have increased among investors, due to the surging interest for gold as an instrument for investment.
This paper intends to focus on the inherent advantages of investing in gold ETFs and the transition phase in the Indian financial market relating to Gold ETFs. These passively managed funds provide many advantages to the investor. They assure convenience, transparency in pricing, diversification at low cost and more liquidity. Gold exchange traded funds is an exchange traded fund that aims to track the price of gold. These are units representing physical gold. These units are traded on the exchange like a single stock. The fundamentals of a country are basically responsible for the performance of gold ETFs. Undoubtedly equities are considered as the best class of assets for long term growth but gold is no exclusion due to appreciation in value.
These are traded on the major stock exchanges including London, Paris, New York. It is not a new concept in India. There has been two ETFs launched in India. One is based on Index which is called spice and another launched with Nifty as an underlying asset, known as gold Nifty Bees. Since 2008, the gold ETFs are recording good returns.
Portfolio, Asset Management Company, Capital gain, derivatives
