It has been over a year since I wrote my best gold ETF in India post, and since then the number of gold ETFs that are present in India have almost doubled.
There are a total of 11 gold ETFs currently present in India, and 4 out of these 11 were launched within the last year. The big change in this space has been the reduction in the expenses that sponsors charge their customers, and now you can see that almost all of them are on the same footing.
You will still see some performance difference in them because every gold ETF holds a small sum of liquid investments other than gold, and that makes a small difference on their returns.
In this post I will look at the performance, volumes, and expense ratios of all the gold ETFs currently traded in India. I couldn’t find the expense ratios of some of these funds, and instead of waiting out I have published this post now, and will update it as and when I find the information.
First up, here are the names, NSE symbols, 1 year returns as on August 12 2011, and their turnover on the same day.
| S.No. | Name | NSE Ticker | 1 Year Return as on Aug 12 2011 | Turnover in Lacs as on Aug 12 2011 |
| 1 | Quantum | QGOLDHALF | 41.07 | 37.11 |
| 2 | UTI | GOLDSHARE | 40.84 | 341.83 |
| 3 | SBI | SBIGETS | 41.26 | 397.37 |
| 4 | Axis | AXISGOLD | – | 15.24 |
| 5 | HDFC | HDFCMFGETF | – | 288.75 |
| 6 | Relianace | RELGOLD | 41.08 | 440.82 |
| 7 | Religare | RELIGAREGO | 41.95 | 9.9 |
| 8 | Benchmark | GOLDBEES | 40.19 | 5,490.42 |
| 9 | ICICI Prudential | IPGETF | – | 14.17 |
| 10 | Kotak | KOTAKGOLD | 40.43 | 1,042.38 |
| 11 | Birla Sunlife | BSLGOLDETF | – | 1.64 |
Regular readers know that every gold ETF in India holds physical gold equivalent to the number of units that are issued in the market, and their price is thus dictated by the price movements of gold.
Since all these ETFs have the same underlying asset, the price movement is also quite similar.
Here is a chart that gives you a better visual of the performance in the last 1 year. Some of these funds are less than a year old, and that’s why you don’t see any corresponding data against their names.
From this chart, you see that the performance are pretty close although Benchmark Gold BeES has done the worst this time period, and Religare has done the best.
When I last looked at this type of data – GoldBeES had done better than all other competitors for a 2 year period, but in the last year everyone else has done better than them.
I took a look at the 2 year performance to see if that confirms this or not. Here is how the 2 year returns chart looks like.
This chart shows a different result from the first one, and to my mind – this goes to show that there is very little difference in terms of these funds performance wise.
Next up, I wanted to see what the expense ratios were like, and how much each fund was charging its customers for maintaining the fund. The tricky part here is that each fund lists down the expenses it will charge in its offer document, and then revises these charges periodically. The revised rates should be found on their website because the offer document itself is not revised, and that still contains the old rates.
When you see blanks in this table that means that I couldn’t find the updated expense charges on their website, and didn’t want to use what’s given in the scheme information document.
Here is the chart that shows that information.
| Name | NSE Ticker | Expense Ratio |
| Quantum | QGOLDHALF | Â 1.25% |
| UTI | GOLDSHARE | |
| SBI | SBIGETS | |
| Axis | AXISGOLD | |
| HDFC | HDFCMFGETF | Â 1.00% |
| Relianace | RELGOLD | |
| Religare | RELIGAREGO | Â 1.00% |
| Benchmark | GOLDBEES | Â 1.00% |
| ICICI Prudential | IPGETF | |
| Kotak | KOTAKGOLD | Â 1.00% |
| Birla Sunlife | BSLGOLDETF |
Finally, let’s take a look at the volumes of these gold ETFs because you want your fund to be as liquid as possible so it isn’t impacted by what a few big players may do. The higher the volumes, the better it is.
Here is a chart that shows the turnover of all these funds on August 12 2011.
This is where you see the staggering difference – Benchmark is just way more popular than anyone else, and a lot of that is due to the fact that they were the oldest gold ETF, and even when they had very little competition – they kept their expenses low, and gained in popularity with investors.
Conclusion
It has been interesting to see this space evolve over the years, and see so many competitors come in, which is always good for the customer. I’m fairly certain the expenses wouldn’t have come down to 1.00% without Benchmark setting that precedent and other companies coming into the space and competing. It feels just a matter of time when someone lowers the expenses to less than a percent, and market their fund.
About the choice of funds themselves, although the performance data doesn’t suggest a clear winner – the volume data shows Benchmark and Kotak to be clear leaders of the pack.
Just i want to invest
Thanks a ton for the good work.
Best wishes & Regards.
jsk
Hi Manshu,
Hoping to see your opinions on the Gold ETF performance… been about a year since this post.
Am more keen since it would now include HDFC Gold ETF (am somehow biased in favour of the HDFCMF generally).
Best regards,
Sujeet.
Nice Article. Many thanks for the information. Would you be able to share the latest results over the past 12 months from Oct 2011 to Oct 2012?
Good Article Mansu…………….!!!
Great help for all new investors…..!!!
Dear Manshu –
Many thanks for your contribution. According to you which is the best gold ETF to invest in currently and why?
Thanks,
Shil
Hey Manshu,
A couple of days back was wondering of how to invest with less paperwork/ hassles. Read your article and must appreciate your knowledge on Gold ETF. Since, new to this and i am bound to ask some basic queries that are difficult for me to envisage.
1. How can one compare/ relate the profits in case physical gold to the tune of One Lac (Indian rupee) is purchased from Tata Tanishq with that of Gold ETF (from any of the providers) of same amount.
2. Is there any kind of tax savings/ rebate under 80 C for Gold ETF.
3. How is FD not better than this??
Just laugh out loud if u find these questions not of a repute to qualify your answer…:) Though, Waiting for reply…
1. You have to find out how much they are selling the gold coins for and what will they deduct when they buy it back. When you find that out you will know the premium they charge and the deduction they make while buying and selling and that will show you the difference because that’s what the difference is going to be.
2. No.
3. FD and gold are two different types of assets. In the past few years gold has given much better returns than fixed deposit but the risk with that is if the price of gold goes down, then the gold ETF may even give you negative return and this is usually not possible with fixed deposit.
Hi Srini,
The Benchmark ETFs were acquired by Goldman Sachs, so their names have changed.
So Benchmark Gold Bees is now called GS Gold Bees. So try to check for other names or cross check with the code on NSE or on Economic Times to be sure about the right ETF. I believe ICICI Direct should have all ETFs.
Hope this helps.
I am beginner trying to invest in ETFs. I was trying to invest through ICICI Direct but i cant see the ‘Benchmarks’ ETF listed there. Can anyone let me know what the problem is? or Should I be not doing it through ICICI Direct?
thanks…
Thanks Manshu, for elucidating ETF marvels and clearing our doubts.
it is always a pleasure to get our doubts cleared from you and it prompts us to ask for more!
I learnt that gold etfs follow pricing of New York gold exchange rates. this exchange is closed mostly when Indian stock market is open. Am I right? if so, why the price of golds etfs fluctuate during day time in India?
The price depends on the gold holding priced in INR based on international prices so that’s the value of the fund. But since this trades, the value will change every second, and will depend on demand and supply and there will be differences in a two day or three day or five day period even. This is true for all ETFs listed everywhere on any asset.
Sometimes you will see the Nifty rise but the US ETF based on Nifty may go down on that day, over a period of time these things will level out on a reasonably good volume ETF. I remember someone leaving a funny comment on the FB page with a screenshot and a funny arrow or something like that and he said Gold ETF or Gold WTF 🙂 Who guarantees my money etc. because he saw that during that point in time the gold price went up while his gold ETF price went down. And that’s in a time period of one or two hours. It was a bit silly and childish so I didn’t respond to him but basically the way these things work you can’t expect the price to match tick by tick second by second and if you don’t feel comfortable doing that then you should buy physical gold.
What will be the impact of proposed duty hike on gold import in 2012 budget on Gold ETFs?
For selling ETFs they must be importing Gold in physical form and paying higher duties.
The direct effect is of course that the gold that they need to import will get more expensive but as to how much it affects people’s appetite for gold is anyone’s guess. I think the gold inflows this year will be less than last year and that’s partly because there won’t be so much price action in it and that will abate demand a bit but then how do you distinguish between demand lowered through that and demand lowered through duty hike.
want to know if all etf are tracking international prices of 1g of gold why their is price difference that to very significant on a particular day and why it does not match with mcx gold prices/g and if expense ratio being same, is volume traded is the only one to decide which etf is best.any relationship with sensex upward and downward movement of gold etf prices.does any gold etf offer facility to turn gold etf into physical gold at any point of time and that to of what carat and in what form.
Thank you for your relevant informations about Gold ETF and keep going.
Hi Manshu,
Very Good Information on Gold ETF’s.Probably the best site,I got after searching alot .
I am planning to invest in GOLD ETF’s monthly with small amount(NOT LUMPSUM 🙂 )
I am very much interesred in subscribing for email updates
GOD BLESS YOU..KEEP UP THE GREAT WORK
Thanks
Surya
Dear Manshu,
I am new to this MF/ETF/Stocks.. So first let me appreciate and thank you for making me a literate in this with all your posts. I would like to know how US economy affects ETF prices across the world?
Dear Manshu,
Thanx for reply, it was helpful.
You are welcome – thank you.
Dear Manshu,
I want to buy Quantum Gold ETF or Benchmark , value amount about Rs. 10000/- initially and steady investment periodically. Please guide me which options would be better investment:
1. Monthly or Quarterly regular investment
2. One time investment a half yearly or annually depending on the market rate?
Is there any chance of getting tax benefits in either of the options?
Also guide me if you have better idea for such investments.
Thanks a lot for your time. Your suggestions have always been helpful.
Bests.
They are both okay, so you can opt for any one of them or combine your investment.
There is no tax benefit in owning gold ETF. Well, I guess there is one that they are treated for capital gains better than physical gold but I don’t think you meant in that way. There is no tax saving opportunity which is what I think you were asking.
Well, for better investment ideas – I’m afraid I don’t give anyone specific investing suggestions or advice and I have another detailed post on why that is 🙂
http://www.onemint.com/2011/07/29/the-trouble-with-personal-recommendations/
Dear Manshu,
I am new to stock & MF trading. I want to buy gold etf for long term. As far as I have seen from the websites the price of 1g of gold of various companies varied the difference that I felt was as much as Rs 300, quantum was seen cheapest, however the performance of funds did not vary much. Do you think buying Quantum gold ETF would be better option for good investment? Please guide.
Bests
I have a very detailed post on why these prices differ which you can find here and will explain the nuances.
http://www.onemint.com/2011/02/15/why-do-different-gold-etfs-have-different-prices/
There is very little difference in the returns of the various gold ETFs so you can choose a couple that you are comfortable with. Quantum just appears cheaper because it represents half a gram instead of one gram that the other ETFs do.
Dear Manshu,
Thanks for your reply.
It was really helpful.
Bests