Gold exchange-traded funds (ETFs) in India experienced a significant inflow of ₹1,028 crore in August, according to data from the Association of Mutual Funds in India (Amfi). This marks the highest inflow since April 2022, following an inflow of ₹456 crore in July.
Gold ETFs are units representing physical gold, which can be in paper or dematerialized form. These ETFs are listed and traded on stock exchanges, making them safe investments regulated by strict rules. The minimum investment required is one unit of the gold ETF, equivalent to the price of one gram of genuine gold. With their listing status, gold ETFs offer ease of trading on the stock market and excellent liquidity.
Investing in gold is an essential part of asset allocation. Gold ETFs are a popular option for short-term investments due to their strong liquidity. They offer the convenience of buying and selling units like an equity share through a trading account. Additionally, they are stored in a Demat account, eliminating worries about theft. The investment is backed by gold bullion of 99% purity or above, ensuring purity.
However, for long-term investments, experts recommend Sovereign Gold Bonds (SGBs). These bonds offer 2.50% interest per year. One of the advantages of SGBs is that the cost of keeping is reduced by 2.50% annually, which is not the case with ETFs or other gold investment options. Furthermore, if held to maturity, the returns from SGBs are tax-free.
It’s important for investors to consult certified experts before making any investment decisions.
Sources:
– Association of Mutual Funds in India (Amfi)
– Mint