The IDBI Gold ETF is an Exchange-Traded Fund (ETF) launched and managed by IDBI Mutual Fund. It is designed to offer investors a convenient way to invest in gold, tracking its price movements in the domestic market without the need to hold physical gold.
Detailed Information about IDBI Gold ETF:
Objective
The primary objective of the IDBI Gold ETF is to:
- Provide returns that closely correspond to the performance of gold (of 99.5% purity or higher) in the domestic market.
- Minimize the tracking error to deliver performance as close to the actual gold prices as possible.
Key Features
(1) Underlying Asset:
- The ETF directly invests in physical gold of high purity (99.5% or higher).
- The value of the ETF is determined by the price of gold in the domestic market.
(2) Units and Trading:
- Each unit of the ETF represents a portion of gold.
- These units are listed and traded on stock exchanges like the NSE (National Stock Exchange) and BSE (Bombay Stock Exchange).
- Investors can buy and sell ETF units during market hours, just like shares.
(3) Liquidity:
- High liquidity ensures that you can buy or sell ETF units during trading hours at market prices.
(4) Investment Denomination:
- Investors can start with small denominations, making it easier for retail investors to participate in gold investment without a large upfront cost.
(5) Expense Ratio:
- The fund charges a low annual expense ratio, which is significantly lower than costs associated with physical gold investments or other forms like gold jewelry or gold coins.
(6) Transparency:
- The NAV (Net Asset Value) of the ETF is published daily, providing clear visibility into the investment’s value.
Advantages of IDBI Gold ETF
(1) No Storage Hassles:
- Avoid the need to store physical gold securely, as the ETF units are held electronically in your Demat account.
(2) Cost Efficiency:
- No making or wastage charges, unlike physical gold in jewelry form.
- Low transaction and maintenance costs compared to holding gold physically.
(3) Market Linked:
- Provides an efficient way to track gold prices with minimal tracking error.
(4) Portfolio Diversification:
- Gold acts as a hedge against inflation and currency fluctuations, making it a good diversification tool for your portfolio.
(5) Tax Benefits:
- Long-term capital gains tax with indexation benefits applies if held for more than three years.
Risks and Limitations
Price Volatility:
- The ETF’s value is directly linked to the price of gold, which can be volatile depending on global and domestic factors.
Tracking Error:
- Though the fund tries to closely follow gold prices, minor deviations (tracking errors) may occur due to fund expenses or market conditions.
Market Liquidity:
- Liquidity of the ETF in the stock market can vary, especially during market fluctuations.
Who Should Invest?
- Investors looking for a hedge against inflation or economic uncertainties.
- Those who want exposure to gold as part of their diversified portfolio.
- People seeking an alternative to holding physical gold without concerns about storage and purity.
How Does It Work?
- The IDBI Gold ETF collects money from investors.
- This pooled money is used to buy physical gold of high purity.
- The value of ETF units fluctuates in line with the price of gold in the domestic market.
- Units can be bought or sold during stock exchange trading hours.
Why Choose IDBI Gold ETF?
- IDBI Gold ETF is backed by IDBI Asset Management, a trusted name in the Indian financial market.
- Provides easy and cost-effective access to gold investments.
- Offers a seamless way to integrate gold into your portfolio without the physical handling or risks.
IDBI Gold ETF Share Price
As of December 20, 2024, the IDBI Gold Exchange Traded Fund (IDBI Gold ETF) was trading at ₹6,838.45 on the Bombay Stock Exchange (BSE).
The day’s trading range was between ₹6,799.95 and ₹6,889.60, with a 52-week range spanning from ₹5,552.70 to ₹7,585.95.
IDBI Gold ETF REturns
The IDBI Gold Exchange Traded Fund (IDBI Gold ETF) aims to replicate the performance of gold in domestic prices. As of June 30, 2023, the fund has delivered the following returns:
| Period | Returns (%) |
| 1 Year | 13.55 |
| 3 Years | 5.13 |
| 5 Years | 12.19 |
| Since Inception (November 9, 2011) | 4.18 |
These returns are compounded annual growth rates (CAGR) and are based on the fund’s performance up to June 30, 2023. Please note that past performance may not be indicative of future results, and it’s essential to consider your investment objectives and risk tolerance before investing.
IDBI Gold ETF Top Holding
The IDBI Gold ETF primarily invests in physical gold of 99.5% purity or higher, and the top holdings reflect this focus. The fund does not hold individual stocks or securities as typical equity funds do. Instead, its primary asset class allocation is:
| Asset Class | Allocation (%) | Details |
| Physical Gold | ~99% | Held in physical form, with the highest purity (99.5% or above). |
| Debt & Money Market Instruments | ~1% | Includes liquid assets for operational and liquidity purposes. |
Key Details of Physical Gold Holding
- Type: Gold bars or bullion held in secure vaults.
- Purity: 99.5% or higher (as per SEBI regulations).
- Source: Purchased from accredited vendors and maintained under strict custody arrangements.
Additional Information
- Tracking Error: The ETF aims to minimize tracking error to ensure its returns closely reflect domestic gold prices.
- Custodian: The gold is stored with a reputed custodian to ensure safety and compliance with regulations.
- Expense Ratio: A low expense ratio ensures cost-effective investment for investors.
IDBI Gold ETF Expense Ratio
The IDBI Gold Exchange Traded Fund (IDBI Gold ETF) has an expense ratio of 0.41%.
This means that 0.41% of the fund’s average net assets are used annually to cover operating expenses, which can impact the net returns to investors.
It’s important to note that expense ratios can vary among different gold ETFs.
For instance, the ICICI Prudential Gold ETF has an expense ratio of 0.50%, while the HDFC Gold Exchange Traded Fund charges 0.59%.
When selecting an ETF, considering the expense ratio is crucial, as lower expenses can lead to higher net returns over time.
However, it’s also essential to evaluate other factors such as tracking error, liquidity, and the fund’s performance relative to its benchmark.
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