In "Outlook Profit" issue dated 21 March 2008, there is a piece on gold ETFs with a graph (data from Dec 03, 2007 till Feb 11, 2008) comparing: i) gold, ii) Gold Benchmark ETF, iii) Kotak Gold ETF, iv) Reliance Gold ETF, and v) Nifty.

If any of you do have this mag or see this article, you'll see (purely from the data shown in the graph), that all the ETFs don't perform identically. Any ideas why?

I know I should be able to verify this myself by going on-line, but my internet privileges are tight for a few days !

I don't think the difference will be much.

Is it?

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There are costs associated with running these funds and these costs are different for various funds.

Also, some funds invest a part their corpus in non-gold investments.

e.g.Kotak Mahindra's Gold Fund invests 0%-10% of its corpus in debt and money market instruments.

These non-gold investments are also a reason why returns of different funds vary.

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The Outlook Profit article that I started this thread about has data for actual gold, and for Benchmark, Kotak, and Reliance gold ETFs (but not UTI) versus the Nifty for the period 03/12/2007 till 11/02/2008.

Now, the way the mag has crunched the numbers is to show values relative to 100 such that all the funds and the Nifty are given the value "100" for 03/12/2007.

From their graph, after mid-Jan, the Nifty falls below 100 whereas gold and the gold funds rise almost continuously.

However, on or about Jan 22, when the Nifty tanked big-time, the mag shows Reliance gold ETF losing the most (can't give values since the mag's labels aren't that detailed).

Their last few days of data (ending on 11/02/2008) show the Kotak gold ETF falling by about 5% whereas the other ETFs and gold rose a couple of per cent.


I downloaded the closing prices of Benchmark, Kotak, Reliance, and UTI gold ETFs from NSE for 01/01/2008 till 14/03/2008. I didn't search for figures for the metal itself.

So the data that I downloaded covers the months of Jan and Feb 2008 and March till date with the Sensex instead of the Nifty.

I then entered these prices against the Sensex closing values for the same period and plotted the data using 01/01/2008 values as "100" the way the mag did for 03/12/2007 values.

I think I should see the same pattern as the mag shows even though I started from 01/01/2008, but I don't.

Instead, as Alchemist suggested there is minimal difference among the ETFs which is a relief. Even the Kotak ETF for the period before 11/02/2008 doesn't show the 5% loss that the mag shows. So what's up?

But I still would like a second opinion on the mag's graph if anyone gets round to it (Outlook Profit, p20, issued dated 21 March 2008).

Use the fund comparator tool in www.valueresearchonline.com

There's not much difference though, as Alchem already pointed out.

1 month returns ( as on 14.03.2007)
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Benchmark Gold ETF 11.46%
Kotak Gold ETF 11.44%
Reliance Gold ETF 11.36%
UTI Gold ETF 11.46%

3 months returns ( as on 14.03.2007)
============================
Benchmark Gold ETF 28.04%
Kotak Gold ETF 28.03%
Reliance Gold ETF 27.10%
UTI Gold ETF 28.11%

Hi,

I was just wondering how will the Gold ETF be treated for tax calculations. As per my knowledge it should be treated as a debt fund i.e. short term gains being added to your income and long term gains taxed at 10% flat.

But, These are traded in de-materialized format and this is where I'm confused. I guess all the transactions in Demat format attract STT. And any thing that attracts STT should be treated similar to equity trading and taxed accordingly.

So, what is the tax treatment of any investment in GOLD ETF?

FYI, I just bought GOLDBEES, which is the Benchmark gold ETF traded on the NSE. There was no STT. I bought through Geojit. My friend bought the same through Asit C. Mehta and there was STT! We'll chase up the matter Monday but my uneducated guess is that STT is levied only on "securities" as defined by something called the SCR Act (Alchemist, please jump in) and gold ETF may not come under securities. Though other ETFs such as BANKBEES, etc. may.

STT is not applicable to Gold funds.

(If there was a fund that invested in shares of Gold-related companies, it would be subject to STT. However, there is no such fund in India).

Gold ETFs are not subject to STT.

Tax rates will be as for non-equity assets.

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Hi,

I have an ICICI Direct demat account. can I apply for Gold ETFs that are available in market through that account? If possible What are the charges that I have to pay like entry load, exit load or brokerages etc.
Can I do BTST with Gold ETF? Outlook for Gold ETF in the next 5-6 months..is it a better time to invest in Gold?

Please reply..

Your purchase of gold ETF will be exactly like buying a share of any company through ICICI Direct. Don't think of it as a mutual fund unit, even though it is. There will be no entry or exit load. There will also be no STT.

Just make sure you find out ICICI Direct's code for the gold ETF you want to buy.

Whether you can do BTST is something you'll have to verify from ICICI Direct. It's better you don't. Alchemist has written somewhere that there is a risk, however small, that you could end up in trouble.

ICICIDirect's stock code for Benchmark Gold ETF is "Goldex".

BTST is allowed on NSE for "Goldex".

Brokerage would be same as any stock.

I prefer bank fixed-deposits to gold for medium-term. I expect INR to appreciate against the USD in coming months and thus gold to fall in INR.

(Banks are offering 10.5% interest on fixed deposits with near-zero risk).

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Here's something on ETFs, including Gold ETFs with one more way in which Kotak's Gold fund is different!

look for your pick.

Shows 1 year performance

Goldshare= UTI Gold