**The Rise of Gold Prices: A Smart Investment Opportunity?**
The gold market in India is experiencing a remarkable surge, with prices reaching an all-time high of Rs 96,000 per 10 grams. This significant increase in gold prices can be attributed to a combination of factors, including growing geopolitical uncertainty, aggressive buying by central banks, and economic instability. The international market is also witnessing a rise in gold prices, with the precious metal crossing the USD 3,300 per ounce mark.
Gold: A Symbol of Emotions and Security
Gold has been a symbol of emotions and security in Indian culture for centuries. Every family in India aims to possess gold as a form of security and wealth. However, with the increasing complexity of the global market, investors are now looking for alternative options that offer ease of investment, low risk, and stable returns. This is where digital gold and gold mutual funds come into play.
Gold ETFs: A Smart Investment Option
Gold ETFs are essentially mutual funds that track gold prices. Investors can buy and sell them like stocks, without worrying about storing gold at home or ensuring its purity. The question remains: have gold ETFs delivered returns as good as or better than physical gold?
Analysis of 5 Oldest Gold ETFs in India
To find the answer, we analyzed the performance of five of India’s oldest gold ETFs over a 15-18 year period. These funds are:
- Nippon India ETF Gold BeES
- UTI Gold Exchange Traded Fund
- Kotak Gold ETF
- Quantum Gold Fund
- SBI Gold ETF
These gold ETFs have delivered returns ranging from 11% to 13% CAGR over the last 16-18 years. Some of these ETFs have outperformed physical gold when returns are compared with that of physical gold since their launch.
Nippon India ETF Gold BeES: A Top-Performing Fund
1. Nippon India ETF Gold BeES
Fund’s launch date: 8 March 2007 (Age – 18 years 1 month)
Return since launch: 12.44% CAGR
Gold prices since 8 March 2007: 12.91% CAGR
Returns on investment in physical gold since 8 March 2007: 12.91% CAGR
UTI Gold Exchange Traded Fund: A Close Second
2. UTI Gold Exchange Traded Fund
Fund’s launch date: 12 March 2007 (Age – 18 years 1 month)
Return since launch: 12.62%
Gold prices during this period: 12.62% CAGR
Returns on investment in physical gold since 18 May 2009: 13.78% CAGR
Kotak Gold ETF: A Reliable Option
3. Kotak Gold ETF
Fund’s launch date: 27 July 2007 (Age – 17 years 8 months)
Return since launch: 13.24%
Gold prices since 27 July 2007: 12.91% CAGR
Returns on investment in physical gold since 27 July 2007: 12.91% CAGR
Quantum Gold Fund: A Good Performer
4. Quantum Gold Fund
Fund’s launch date: 22 February 2008 (Age – 17 years 2 months)
Return since launch: 11.69%
Gold prices since 22 February 2008: 11.99% CAGR
Returns on investment in physical gold since 8 March 2007: 11.99% CAGR
SBI Gold ETF: A Mid-Performing Fund
5. SBI Gold ETF
Fund’s launch date: 18 May 2009 (Age – 15 years 11 months)
Return since launch: 11.30%
Gold prices during this period: 11.30% CAGR
Returns on investment in physical gold since 18 May 2009: 11.07% CAGR
Benefits of Investing in Gold ETFs
Gold ETFs offer several benefits, including:
• No worries about purity or theft
• Completely digital and transparent transactions
• Regulated by SEBI
• Entry and exit at any time through the stock market
• Diversification in the portfolio at low cost
Risks Involved in Gold ETFs
However, investing in gold ETFs also involves risks, including:
• Volatility in gold prices directly affects the returns of the fund
• Potential for lower returns in the long term compared to equity
Who Should Invest in Gold ETFs?
Gold ETFs are suitable for:
• Investors who want to invest in gold but avoid the hassle of owning physical gold
• Investors with an investment time horizon of 5 years or more
• Those who do not have any share of gold in their portfolio
• People who want to protect their investments from inflation and global risks
Conclusion
Gold ETFs have come a long way in India, and their performance shows that investing in them can be a stable, convenient, and safe option for long-term investors. At a time when physical gold has become expensive and global volatility is rising, gold ETFs can prove to be a wise decision for investors.