A STUDY ON INVESTOR’S

PERCEPTION TOWARDS
INVESTING IN GOLD ETFS
OBJECTIVES
 To know the investors preference towards investments on
gold ETFs.
 
 To know the market trends, which invokes the customer to
invest on gold ETFs?
 
 To know the investor redemption rate on gold ETFs
 
 To know the investor risk taking ability in Gold ETFs
INTRODUCTION
 ETFs are just what their name implies: baskets of
securities that are traded, like individual stocks, on an
exchange. Unlike regular open-end mutual funds, ETFs
can be bought and sold throughout the trading day like
any stock.
 Gold ETFs - Simply put, these are exchange traded
mutual fund schemes that invest in physical gold. Also
known as paper gold.
 These schemes are a convenient and relatively less
expensive alternative to owning physical gold. These
schemes are designed to seek returns that closely
correspond to the returns provided by investment in
physical gold.
 Gold ETFs provided investors a means of participating in the
gold bullion market . Gold ETFs would be a passive
investment; so, when gold prices move up, the ETF appreciates
and when gold prices move down, the ETF loses value. Gold
ETF tracks the performance of Gold Bullion.

 Each unit approximately equal to the price of 1 gram of Gold.

STRUCTURE OF GOLD ETF
WHY INVEST IN GOLD ETF
Effective portfolio diversifier.
Gold’s appeal as an alternative investment option remains high
investors hope to maximize returns and minimize risk. While many
investors may believe that their portfolios are adequately diversified,
they typically contain only three asset classes - stocks, bonds/fixed
income instruments and cash.
To counter adverse movements in a particular asset or asset class, many
investors now strive to achieve more effective diversification
in their portfolios by incorporating alternative investments such as
commodities.
While gold has shown strong returns over recent years, its most
valuable contribution to a portfolio lies in the fact that it is not
correlated with most other assets. This is because the gold price is not
driven by the same factors that drive the performance of other assets.
Demand for gold may continue to rise as investors diversify their
portfolio with an asset that is not correlated with the equity markets. In
the meltdown seen in 2008-09, gold was not correlated with the other
assets and hence saved.
ADVANTAGES OF GOLD ETFS
Easy Accessibility
Hedge against the risk
Hedge against inflation
Easy Liquidity
Backed up by physical Gold which have
the purity of 995 parts per 1000 (99.5%)
or higher; sourced from LBMA (London
Bullion Market Association) approved
refiners
RESEARCH METHODOLOGY AND DATA
COLLECTION METHODS
 Primary data:
We collected 100 samples from the investors of various fund
houses in Guntur.
 Secondary data:

Internet poling in financial websites like (investopedia,money

control.com), customer satisfaction survey of various fund
houses.
 Quantitative Teqnique:

Analysis of data is done by Chi square test.


ANALYSIS OF THE SURVEY DATA

 We analyze the data by using bar charts and pie charts.

 C:\Users\Hinduja\Desktop\Analysis of the survey data.d
ocx
FINDINGS
 
 Most of the investors feeling that Gold ETFs are safest investment avenue because
investors hope to maximize returns and minimize risk. While many investors may
believe that their portfolios are adequately diversified, they typically contain only three
asset classes - stocks, bonds/fixed income instruments and cash.
To counter adverse movements in a particular asset or asset class, many investors now

strive to achieve more effective diversification in their portfolios by incorporating

alternative investments such as commodities.
 
While gold has shown strong returns over recent years, its most valuable contribution to

a portfolio lies in the fact that it is not correlated with most other assets. This is because
the gold price is not driven by the same factors that drive the performance of other
assets. Demand for gold may continue to rise as investors diversify their portfolio with
an asset that is not correlated with the equity markets. In the meltdown seen in 2008-09,
gold was not correlated with the other assets and hence saved.
 
Investors are feeling that Gold ETFs as an Inflation Hedge .Gold is renowned as a

hedge against inflation – as inflation goes up, price of gold also tends to go up along
with it. Gold preserves the purchasing power and even increases it gradually. Inflation
adjusted gold prices have generated a positive rate of return in the last 7 years.
 
SUGGESTIONS
 Returns on GETFs is depends on demand supply conditions of gold bullion
market which changes variably so returns are uncertain some times. So
investors are better to consider GETFS as an alternative investment.
 Investing in Gold and Gold related securities depends on investors
objective so,
 If investor’s objective is an ornamental or marriage needs fulfilling then It
is better to go for physical gold.
 If investor’s objective is an investment objective for long term returns then
It is better to go for GETFS, Because these are less risky over gold mining
securities and Gold futures.
 GETFS hedge against inflation and risk, also Gold has negative correlation
with the dollar, investors are better to include Gold ad an alternative
investment option in the form of GETFS to minimize the risk of portfolio.
 GETFS are very much convenient investment avenue for small investors, as
the unit value is less so, small investors can choose GETFS as it is backed
up by physical gold.