Understand & Invest in Gold ETFs Before You Regret
  Amid the current Russia-Ukraine Crisis, gold exchange-traded funds (ETFs) and gold mutual funds are two investment options that are not only secure for an investor but also provide a hedge against volatility in the equity market caused by the Russia-Ukraine War and increasing inflation. In this article, we shall be discussing the features and benefits of gold ETFs and will also understand how you can invest in them.

What is Gold ETF?

Gold ETFs are open-ended mutual fund schemes whose units represent physical gold, which may either be in paper form or dematerialized form. A single unit of gold ETF denotes 1 gram of gold. The biggest benefit of investing in gold ETFs is that they provide the flexibility of stock trading along with the simplicity of gold investing. Gold ETFs are considered to be as good as investing in real gold as the prices of gold ETFs are directly proportional to the price of gold. Gold ETFs are listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). Gold ETFs generally invest the money in the purest gold bullion.  

Who should invest in Gold ETF?

Gold ETFs are perfect for investors who want to invest in gold but are concerned about the purity of real gold, its storage, and want to take tax advantages. When opposed to real gold, which requires designing and making charges, gold ETFs are quite affordable. Aside from these options, an individual can begin investing in gold ETFs by acquiring a single unit.  

Features and Advantages of Gold ETFs


Purity of Gold under gold ETFs is guaranteed and as stated above also, each unit of Gold ETF is backed by the purest gold bullions.


Unlike buying physical gold, you can purchase gold ETFs from the ease of your home through a DEMAT account. You can purchase and sell gold ETFs at any time through your DEMAT Account.


The price of Gold ETFs is driven directly by the prices of Gold. Thus, the prices are totally transparent and accessible by an investor on a real-time basis.

Lesser Cost of Investment

Investing in Gold ETFs is far more cost-effective than investing in actual gold, where you must pay making or design charges, or gold mutual funds, where you must pay an entry and exit load. In Gold ETFs, an investor is required to pay only the Expense Ratio. The Expense Ratio is the fees paid to an Asset Management Company for the management of Gold ETFs. Gold ETF expense ratios typically range from 0.5 percent to 1.0 percent each year.

Safe & Secure

Gold ETFs have virtually no risk of theft, which is always a concern for investors wishing to invest in actual gold. The units of Gold ETFs are held in your DEMAT account. Aside from that, an investor can save money on bank locker rental fees.  

How to Invest in Gold ETFs

Step 1: Open a Demat account and a trading account online with a stockbroker, by submitting PAN, Aadhar, and other KYC documents.   Step 2: Lookout for a Gold ETF in the search option. Select a Gold ETF and invest in it.   Step 3: As your order to invest in a Gold ETF is executed, a notification is sent by your stockbroker, and the quantity of Gold ETF units gets reflected in your holdings.  

Risks involved

Gold ETFs, like any other financial asset, is exposed to market risks that affect gold prices. Gold ETFs are also governed by the SEBI Mutual Funds Regulations. To safeguard the interest of investors, a statutory auditor must audit the physical gold purchased by fund houses on a regular basis.  


The article is for educational and informational purposes only and does not constitute any advice or a legal opinion. The article is based upon relevant laws and/or facts applicable at the time of publication and has been prepared with due accuracy and reliability. By the use of the said information, you agree that the “author/investbuddy.in” is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors, or any kind of omissions thereof.

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