HDFC Gold ETF Review and Details on Expense Ratio,Performance,Buying SIP and NSE Symbol
November 1, 2011Gold Bees ETF India Review
November 4, 2011Axis Gold ETF India Fund Investment Objective
The Axis Gold ETF started in 2010 under the NSE Symbol AXISGOLD.The Scheme endeavors to generate returns that are in line with the performance of gold, subject to Tracking Errors. The corpus of the Scheme isinvested in Gold Bullion of fineness – 995 parts per 1,000 (99.5%) or higher. Further, the Scheme may also invest in gold related instruments (including derivatives related to gold) as per SEBI guidelines.
- Face Value – Rs. 100
- AMC – Axis Asset Management Company Ltd.
- Trustee Company – Mutual Fund Trustee Limited
- Custodian – Deutsche Bank AG
- Exchanges for Trading – NSE and BSE
- Fund Manager – Mr. Anurag Mittal
- Scheme Type – Open ended Exchange Traded Fund
- Benchmark – price of Gold
- Dividends option – Yes
- Assets Under Management- Rs.183 Crores as at March 2011
- Tracking Error – 0.14%
- Entry Load & Exit Load – Nil
- Total Expense Ratio – 2.5%
- Minimum Investment – 1 Unit (1gram of gold)
- NAV – Every business day
- Creation Unit – 1,000 units of the ETF.
Asset Allocation & Performance
Gold Bullion – 90% (minimum); 100% (maximum)
Bonds and Money Market instruments – 0% (minimum); 10% (maximum).
Performance in last 6 months -9.08 %
Performance since inception – 15.38%
Performance is based on NAVs as of May 20th 2011.
How to Trade
Online:
The units of the Scheme will be available in dematerialized form. Investors need to have a beneficiary account with the Depository Participant registered with NSDL / CDSL as may be indicated by the Fund at the time of launch. The units of the Scheme will be issued, traded and settled compulsorily in dematerialized form.
Through Stock Exchange:
Buying / Selling units on the stock exchange is just like trading any other normal listed securities. If an investor has bought units, an investor has to pay the purchase amount to the broker & when the investor sells units, he needs to deliver the units to the broker.
Certain Risks and Disadvantages of Axis Gold ETF
- The Biggest Disadvantage of Axis Gold ETF is its expense ratio of 2.5% which is the highest in India and makes no sense for a passive fund.Axis Gold ETF is only meant for investors who are not too knowledgeable or don’t have the time to do research on Gold ETFs.Not that Axis is the only one charging usurious expense ratios.Other fund houses like SBI are doing the same.I would recommend putting money in Goldman Sachs Bees and Kotak Gold ETF.
- Market Risk – Since the NAV of AXISGOLD is closely related to the value of gold held by the scheme, it may fluctuate for several reasons like demand and supply of 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 that may be imposed by RBI or the Government of India.
- Counter party Risk – India does not have an Exchange for trading physical gold. Therefore, the gold ETF 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 gold ETF has to sell gold only to bullion bankers/traders who are authorized to buy gold. Though there are adequate number of players to whom the gold ETF can sell gold, it may have to resort to distress sale of gold if there is no or low demand for gold to meet its cash needs of redemption or expenses.
- Risks associated with 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.
You can check out other options for investing in Gold ETF Funds in India