SBI GETS INTRODUCTION and INVESTMENT OBJECTIVE:
SBI GETS is an open ended Gold Exchange Traded Scheme. Even though this is an open-ended scheme, investors need to buy & sell units of the scheme on the stock exchanges where these units are listed for liquidity at the market price, subject to the rules and regulations of the exchange. The Scheme opened on March 30, 2009.
The investment objective of the fund is to seek to provide returns that closely correspond to returns provided by price of gold. However, the performance of the scheme may differ from that of the underlying asset due to tracking error. The benchmark is the price of the Gold. Special Products SIP, SWP, STP are not available. No dividend would be declared under the Scheme unlike Reliance Gold ETF
SBI Gold ETF Expense Ratio
The SBI GETS Expense ratio is 2.5%.This is one of the highest expense ratios in the industry much higher compared to other Gold ETF Fund products like Kotak or Goldman.The reason of this expense ratio is not apparent since passive investment in gold does not require such high expenses.This is a deal killer from SBI Asset Management and I would strongly recommend never to buy GETS unless SBI reduces this expense ratio
SBI Gold ETF Trustee,Custodian,Symbol Information
- Trustee – SBI Mutual Fund Trustee Company Private Limited (SBIMFTCPL), a wholly owned subsidiary of SBI. The registered office is situated in Mumbai.
- The Bank of Nova Scotia is the custodian of this fund.
- Fund Manager Mr. Raviprakash Sharma.
- Symbol GETS (SBI Gold Exchange Traded Scheme).
SBI Gold ETF NAV
NAV of the units is closely related to the value of gold held by the scheme, which may fluctuate for several reasons like demand and supply for gold in India and in the Global market, Indian and Foreign exchange rates, Interest rates, Inflation trends, trading in gold as commodity, legal restrictions on the trade of gold imposed by RBI, Government of India or other countries, trends and restrictions on import/export of golden jewellery in and out of India, etc.
NAV of SBIMF GETS units would be declared on every business day. Applicable NAV is the Net Asset Value per Unit at the close of the Business Day on which the application for purchase or redemption is received at the designated investor service centre and is considered accepted on that day.
SBI Gold ETF SCHEME ASSET ALLOCATION
Maximum:
Gold and gold bullion 100%
Debt & Money Market Instruments 10%
Minimum:
Gold and gold bullion 90%
Debt & Money Market Instruments 0%
SBI Gold ETF PERFORMACE OF THE SCHEME
Return as on May 31, 2011:
1 Year:
SBI GETS 21.34%
Benchmark (Price of Gold) 22.32%
Since Inception:
SBI GETS 22.97%
Benchmark (Price of Gold) 24.20%
SBIGETs performance has been almost 1.5% below the price of gold which means that it is the bottom percentile of performers amongst the 12 Gold ETFs currently listed on the Indian exchange.Coupled with its very high expense ratio SBIGETS ranks amongst the worst ETFs listed on the Indian Markets
RISKS ASSOCIATED WITH THE FUND:
Counter party Risk: Since there is no exchange for physical gold in India, the Fund may have to buy or sell gold from the open market, which may lead to counter party risks for trading and settlement.
Liquidity Risk: The Fund can sell gold only to bullion bankers/traders who are authorized to buy gold, which may lead to distress sale if there is no or low demand of gold, to meet its cash needs for redemption or expenses.
Currency Risk: NAV of the units is determined on the imported (landed) value of gold, which is computed by multiplying international market price by US dollar value. The value of gold or NAV, therefore will depend upon the conversion value of US dollar into Indian rupee and attracts all the risks attached to such conversion.
Regulatory Risk: Any changes in trading regulations by the stock exchange or SEBI may affect the ability of Authorized Participant to arbitrage, resulting into wider premium/ discount to NAV. Similarly, any changes in the regulations relating to import and export of gold or gold jewellery, may affect the ability of the scheme to trade gold against the purchase and redemption requests received.
Asset Class Risk: The returns from physical Gold in which the Scheme invests may under perform returns from the securities or other asset classes.
Physical gold: There is a risk that part or all of the Scheme’s gold could be lost, damaged or stolen. This may have adverse impact on the operations of the scheme and consequently on investment in units.
SBI Gold ETF PRICE
The market price of SBI GETS units is largely dependent on two factors
(1) the intrinsic value of the unit (or NAV), and
(2) demand and supply of units in the market.
Sizeable demand or supply of the units on exchange may lead the market price of the units to be quoted at a premium or discount to NAV. The Fund may have to sell gold to meet recurring expenses. In such an event, irrespective of whether the price of gold goes up or not, the NAV of the Fund will go down due to such expenses.
SBI Gold ETF UNITS
The units of SBI GETS will be issued only in Demat form through depositories. The records of the depository are final with respect to the number of units available to the credit of unit holder. Settlement of trades, repurchase of units by the fund depends up on the confirmations to be received from depository on which the fund has no control.
Each unit of SBI GETS will be approximately equal to price of one gram of the value of gold. Creation Unit Size is equal to 1,000 units of SBI GETS.
SBI Gold ETF TAX Implications
Conversion of the underlying physical Gold to GETS attracts capital gains tax depending on acquisition cost and holding period. SBI GETS is not an equity oriented Fund; therefore, tax benefit related to equity oriented Fund will not be available.
SBI Gold ETF TRACKING ERROR
Tracking error means the variance between daily returns of the underlying benchmark and the NAV of the scheme for any given period. Tracking error may have an impact on the performance of the scheme. However, the AMC will endeavour to keep the tracking error as low as possible.
HOW TO PURCHASE SBI Gold ETF
An investor can buy units of the Scheme on a continuous basis on the Stock Exchange where the Scheme units are listed and traded like any other publicly traded securities at prices which may be close to the actual NAV of the Scheme. There is no load for investors transacting on the stock exchange. However, there would be cost of brokerage and other transactions costs payable to broker or sub-broker of the exchange.
HOW TO INVEST IN SBI GOLD ETFs ONLINE
- Exchange Traded Funds (ETF) are mutual funds which are traded on an exchange just like any other stock. To invest in a gold ETF, one needs to have a demat account and a trading account with an online brokerage firm. The documents required to open a demat and trading accounts are identity proof, Address proof and PAN card.
- Select a gold ETF and place the order online from one’s broker’s trading portal. The orders are routed to the exchange, where the purchase order is matched with sell orders and executed. A confirmation is sent back to the investor.
- In an NFO, the request goes to the fund house and gold ETF units will be allotted. Once the ETF is listed on an exchange one can trade the units from the NFO on the exchange.
Kotak Securities, SBI , ICICI direct and many other brokers are providing facility to trade in gold ETFs in India.
Read about the other Ways to Invest in Gold in India and Best Gold ETF Fund in India,Silver ETF in India
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