Gold Exchange Traded Fund

What is an Exchange Traded Fund (ETF)?

The Exchange Traded Fund (ETF) is primarily a mutual fund scheme which is listed and traded on the stock exchange. An ETF can invest in:

Equity - replicating the composition and performance of an equity index (e.g. CNX Nifty, CNX Junior Nifty)     Commodity - tracking the actual price of the commodity (e.g. Gold)     Money market instruments - which include short-term government securities, call money

What is a Gold Exchange Traded Fund (Gold ETF)?   A Gold ETF is a mutual fund scheme that invests in physical gold and gold related instruments and is listed and traded on a stock exchange. The investment objective of a Gold ETF is to provide returns that, before expenses, closely correspond to the returns provided by the domestic price of gold.       What are the features of Gold ETFs?   Gold ETFs can be bought in minimum quantity of one unit on a stock exchange.     One unit represents approximately one gram of gold.     Units are held in a demat account.     No securities transaction tax (STT) due to ETFs being classified as a debt fund.       Benefits of buying Gold ETFs over physical gold       With Gold ETFs, you don't have to pay additional costs like making or delivery charges.     Quick and convenient dealing through a demat account.     No storage or security concerns for investors.     No issue of purity as gold purchased through an ETF is as per SEBI guidelines and is subject to SEBI inspection.     ETFs can be easily bought or sold at any time during trading hours at transparent, real-time prices.     For Gold ETFs, the long-term capital gains tax is applicable after one year, versus three years for physical gold.     No wealth tax.     The underlying physical gold is stored with a SEBI registered custodian and its quantity is physically verified by statutory auditors on a half yearly basis.