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GOLD EXCHANGE TRADED

FUND
PRESENTED BY :
ANKIT SHUKLA
BM-09039
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.

Practically any asset class can be used to


create ETFs. Globally there are ETFs
on Silver, Gold, Indices.
GOLD ETFs
Gold ETFs (G-ETFs) are a special type of
ETF which invests in Gold and Gold related
securities.
Holding physical Gold can have its’
disadvantages:
• Fear of theft
• Payment Wealth Tax
• No surety of quality
• Changes in fashion and trends
• Locker costs
• Lesser realisation on remoulding of ornaments
WORKING
DURING NFO :
• AMC decides of launching G-ETF
• Investors give money to AMC and AMC gives units
to investors in return.
• AMC buys Gold of specified quality at the
prevailing rates from investors’ money.

ON AN ON GOING BASIS :
• Authorized Participants (typically large
institutional investors) give money/ Gold to AMC.
• ¨ AMC gives equivalent number of units bundled
together to these authorized participants (AP)
• APs split these bundled units into individual units and offer for sale in the
secondary market
• Investors can buy G-ETF units from the secondary markets either from the
quantity being sold by the APs or by other retail investors
• Retail investors can also sell their units in the market.

1 Creation Unit = 100 ETF units


NAV (Rs.) = 1050
Price of 1 gm of Gold (Rs.): 1000
So, 100 Units will cost (Rs.) = 1050 * 100 = 1,05,000
100 ETF will be equal to 100 gm of Gold
Therefore, value of Portfolio Deposit (Rs.)=1000 * 100 =1,00,000
Hence Cash Component (Rs.) = 1,05,000 – 1,00,000 = 5,000
MARKET MAKING BY APs
AP PAY PORTFOLIO DEPOSIT AND/OR CASH COMPONENT AND GET
CREATION UNIT IN RETURN.
EXAMPLE
Price of Gold (Rs. / gm) = 1000
NAV (Rs.) = 1050
CMP of ETF units (Rs.) = 1200
THANK YOU