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Gold Etf Final Ppt

Gold Etf Final Ppt

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Published by MRINAL KUMAR
Gold ETF,ETF,Gold
Gold ETF,ETF,Gold

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Published by: MRINAL KUMAR on Apr 13, 2011
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11/03/2012

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PROJECT REPORT ON

FINANCIAL PERFORMANCE & CUSTOMER AWARENESS OF GOLD ETF IN INDIA
Submitted By MRINAL KUMAR (BBA 4501/08)

1.0 INTRODUCTION
‡ Exchange Traded Funds (ETFs) are mutual fund units which investors buy/sell from the stock exchange, as against a normal mutual fund unit, where the investor buys /sells through a distributor or directly from the AMC. ‡ They are open ended mutual funds that are passively managed and most of them seek to mirror the return of an index, a commodity or a basket of assets. ETFs are listed and traded on stock exchanges like stocks.

1.1 CONCEPTUAL FRAMEWORK 
ETF - The exchange-traded fund or ETF, is often structured as an open-end investment company. ETFs combine characteristics of both mutual funds and closed-end funds.  ETFs are traded throughout the day on a stock exchange, just like closed-end funds, but at prices generally approximating the ETF's net asset value.

Contd
‡ Unlike regular open-end mutual funds, ETFs can be bought and sold throughout the trading day like any stock. ‡ Gold ETFs provided investors a means of participating in the gold bullion market without the necessity of taking physical delivery of gold, and to buy and sell that participation through the trading of units on stock exchange.

ETF BASICS
If the demand of the ETFs in the markets soars, the ETF would start trading at a premium from its intrinsic value, which should be equal in proportion to the index that it is charting. This premium would make the buyers go to the fund house where they would have to redeem their shares in the proportion held under each unit of the ETF. Such units that are bought directly from the fund house are called "creation units". Usually the lot size in which one can buy creation units is so high that only an authorized participant (market maker) or institutional investors may have the wherewithal to buy these. In such case the retail investor would have to go to the market itself to buy the units of the ETF.

Contd
‡ ETFs offer public investors an undivided interest in a pool of units and other assets. ‡ ETFs do not sell or redeem their individual shares at net asset value, or NAV. Instead, financial institutions purchase and redeem ETF shares directly from the ETF, but only in large blocks, varying in size by ETF from 25,000 to 200,000 shares, called "creation units". ‡ Purchases and redemptions of the creation units generally are in kind, with the institutional investor contributing or receiving a basket of units of the same type and proportion held by the ETF

‡ An ETF is basically created through an initial public offering (IPO) by the Asset management companies in which only authorized participants, institutions, large investors are allowed to participate.

Advantages of Exchange-Traded Funds
‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Lower costs Buying and selling flexibility Market exposure and Diversification Continuous, Intraday Pricing Access to indicators and Indexes Diversity in Investment Opportunities Low Expense Ratios Transparency Ability to Track an Entire Market Segment

GOLD ETF 
Gold exchange-traded products are exchange-traded funds (ETFs), closed-end funds and exchange-traded notes that aim to track the price of gold.  The Gold ETF fund will purchase a large amount of gold, maintaining the physical metal in storage. They will then issue shares in baskets, the idea here being that the value of the shares will increase with the price of gold bullion.

1.3 COMPANY PROFILE
COMPANY ALLOTMENT EXPENSE DATE RATIO 08/03/2007 1% 1% 1% 1% 1% 1% ENTRY LOAD NIL NIL NIL NIL NIL NIL EXIT LOAD NAV(22/3/2 011) 2,033.07 2,032.44 2,031.69 1,977.99 2,070.45 1,010.85

GOLD BEES

NIL NIL NIL NIL NIL NIL

GOLDSHARE 01/03/2007 KOTAKGOLD RELGOLD SBIGETS QGOLD 20/06/2007 15/10/2007 30/03/2009 21/01/2008

1.4 PROBLEM FORMULATION
‡ What is the Return on Investment of Gold ETFs over 1 and 2 year? ‡ What is the Standard Deviation among major Gold ETFs in India? ‡ What is the measure of Skewness of different Gold ETFs in India? ‡ What is the Coefficient of Correlation between the Gold ETF and Nifty Index Return? ‡ How is Gold ETF different from Mutual Funds? ‡ What is the level of customer awareness among consumers regarding investment avenues in Gold ETFs?

3.1 OBJECTIVES OF THE STUDY
‡ To provide an insight into the concept of Gold ETF and to study the benefits of investing in them. ‡ To analyze and compare the financial performance of various Gold ETF in India and their relation to market index movement. ‡ To ascertain the difference between Gold ETFs and Mutual Funds. ‡ To conduct a primary study to find out the awareness of the Gold ETF among investors and to ascertain the investment behavior relating to Gold ETF and other investment options in India.

3.2 RESEARCH METHODOLGY
RESEARCH DESIGN: Descriptive Research 3.3 SAMPLING FRAMEWORK SAMPLING DESIGN: Convenience sampling SAMPLE SIZE: 50 Respondents

Contd
SOURCE OF DATA COLLECTION PRIMARY DATA: The primary data was collected from the sample through sample survey with the help of questionnaire analysis. SECONDARY DATA: The secondary data was collected through the National Stock Exchange website (http://www.nseindia.com) database for the past script price of the various Gold ETFs studied in this project and the index prices of NIFTY.

4.0 DATA ANALYSIS & INTERPRETATION
STANDARD DEVIATION(2YR)
194

192

190

188

186

184

182

180 GOLDBEES GOLDSHARE KOTAKGOLD QUANTUMGOLD RELIANCEGOLD SBIGETS

SKEWNESS(2YR)
0.12

0.1

0.08

0.06

0.04

0.02

0 GOLDBEES GOLDSHARE KOTAKGOLD QUANTUMGOLD RELIANCEGOLD SBIGETS

RETURN(1YR)
23.4 23.3 23.2 23.1 23 22.9 22.8 GOLDBEES GOLDSHARE KOTAKGOLD QUANTUMGOLD RELIANCEGOLD SBIGETS

GOLD ETF RETURN(2 YR)
45 40 35 30 25 20 15 10 5 0 GOLDBEES GOLDSHARE KOTAKGOLD QUANTUMGOLD RELIANCEGOLD SBIGETS

CORRELATION COEFFICIENT(2 YR)
0.87

0.86

0.85

0.84

0.83

0.82

0.81 GOLDBEES GOLDSHARE KOTAKGOLD QUANTUMGOLD RELIANCEGOLD SBIGETS

BETA ANALYSIS
0.12 0.1 0.08 0.06 0.04 0.02 0 -0.02 -0.04 -0.06 Series1 GOLDBEES -0.02 GOLDSHARE -0.02 KOTAKGOLD -0.03 QUANTUMGOLD -0.05 RELIANCEGOLD -0.04 SBIGETS 0.11

Are you aware about Gold ETF?
90 80 70 60 50 40 0 20 10 0 YES NO

Series1

 

 

Do you invest in Gold ETF?
100 90 80 70 60 50 40 0 20 10 0 YES 10 NO 90

Which Gold ETF do you invest in?
OTHERS 18% GOLDBEES 18%

KOTAK GETF 9% QUANTUM GETF 0% RELIANCE GETF 0%

SBI GETS 27%

UTI GOLDSHARE 28%

Reasons for investing in Gold ETF
Portfolio Diversification 9% Tradable 9% Others 9% Less Volatility 18% Better Return 9%

Electronic Form 9%

Safety 37%

Investment option preferred
50 45 40 35 C 30 25 20 15 10 5 0 FD GOLD ETF DEBT PHYSICAL GOLD MUTUAL FUND EQUITY REAL ESTATE INSURANCE E D A B

FACTORS INFLUENCING INVESTMENT
80 70 60 50 40 30 20 10 0 SAFETY CAPITAL GAIN TIME PERIOD TAX BENEFIT FIXED INCOME ROI

A B C D E

5.0 FINDINGS OF THE STUDY
‡ The degree of variability of the return is significantly lower than the degree of variability of the market index (NIFTY) as found from the analysis of Standard Deviation. ‡ The return generated by Gold ETF is more than returns provided by Debt Securities for 1 year and 2 year period showing a skewness towards the higher value of the range.. ‡ The returns of Gold ETF have a positive degree of correlation with the market index (NIFTY). ‡ The Beta value of most of the Gold ETF is in negative indicating that they have a reverse relation to the market index return.

Contd..
‡ Majority of the investors lack awareness and knowledge about investment opportunities in Gold ETF schemes offered by various AMCs (Asset Management Companies) and hence do not invest in them. ‡ They prefer investment in other investment options which provide them with safety of their returns along with capital gain such as Fixed Deposits and Debt securities. ‡ ETF schemes provide several advantages over normal open ended Mutual Funds.

Contd..
‡ The other investment products investors prefer are Mutual Funds, Equity Shares, and Real Estate, Insurance. ‡ The factors affecting investment are safety of return, capital gain, return on investment and investment time period.

6.1 RECOMMENDATIONS OF THE STUDY
‡ AMCs should take steps to increase customer
awareness regarding Gold ETF scheme investment options and the benefits of investing in them. ‡ Stock exchanges should also take steps to increase customer awareness with investor education and other awareness campaigns through advertising in newspapers, magazines and other advertisement media instruments.

Contd..
‡ Investors¶ investing in gold should diversify portfolio in Gold ETF instead of investing in Physical gold. ‡ AMCs should provide more trading flexibility in Open ended Mutual Funds.

6.2 CONCLUSION
‡ Gold ETFs offer investors a convenient way and means of investing in gold as a security without the hassles of storage and safety. ‡ It also provides various other benefits such as electronic trading and Demat storage facility. ‡ Only few people were aware of the investment opportunities in Gold ETF and some means must be taken to educate and inform investors about the pros and cons of investing in Gold ETFs.

Contd..
‡ The financial performance analysis indicates that the returns provided were better than debt securities such as Fixed Deposits, Bonds, etc ‡ It also showed a positive degree of correlation between market index return (NIFTY 50) and the return provided by the various Gold ETFs.

6.3 LIMITATIONS OF THE STUDY
‡ The survey mainly includes the salaried service class people which could lead to results being more biased towards them as compared to business men. ‡ The sample size is small as compared to the number of investors present in India does not include investors of other geographical areas. ‡ Majority of the investors are not aware about the concept of Gold ETF. ‡ Majority of the investors¶ who invest in gold prefer physical gold instead of Gold ETF.

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