Groww Mutual Fund Introduces a Smarter Way to Invest in Gold: Groww Gold ETF
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For investors interested in investing in gold, Groww Mutual Fund has introduced the Groww Gold ETF, which is designed to simplify the process of investing in the gold market, by investing in digital gold, to eliminate the concern of buying, storing or insuring physical gold. The New Fund Offer (NFO) is now open, until October 18, 2024.
The Groww Gold ETF is an open-ended Exchange Traded Fund (ETF) that mirrors the domestic price of physical gold, based on the daily spot fixing price set by the London Bullion Market Association (LBMA). The ETF invests in gold bullion with a purity of 99.5%.
Rising Interest in Gold ETFs
Recently, India has seen a significant uptick in interest in gold ETFs, driven by factors such as perceived safety and potential returns1. In July 2024, investments in gold ETFs soared to ₹1,337.4 crore, marking the highest monthly net inflows since February 2020. After a dip of ₹395.7 crore in April, gold ETFs rebounded impressively, attracting inflows of ₹2,890.9 crore between May and July. Additionally, a reduction in customs duty has led to a 9% decrease in gold prices, creating a favorable environment for investors seeking to invest in gold.
Key Features of the Groww Gold ETF
● Returns Linked to Gold Performance: The ETF aims to closely track gold price movements, allowing you to benefit from the asset’s performance.
● Regulated and Transparent: Governed by SEBI, the ETF ensures transparency and security, with units maintained in demat accounts.
● Diversification and Currency Hedging: Historically, gold has acted as a hedge against inflation and currency depreciation, making it a potentially valuable part of an investment portfolio.
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● Convenient and Accessible: Investors can trade ETF units on the stock exchange during market hours, ensuring liquidity and price transparency.
● Flexibility: Each unit represents 0.01 grams of gold, making it accessible to a broader range of investors.
● Use as Collateral: The Groww Gold ETF can also serve as collateral for loans, enhancing its financial utility.
● Tax Efficiency: The ETF offers long-term capital gains (LTCG) tax advantages, which may be more favorable than investing in physical gold.
Gold as a Financial Hedge
Gold has consistently demonstrated its ability to perform well during financial crises. During the 2008 financial crisis, gold yielded a positive return of 5.8%4, while major stock indices fell sharply. Over the past decade, gold has shown impressive returns, achieving 106.76% in USD terms from 2014 to 2024, and a remarkable 181.62% return in INR terms, underscoring its role as a hedge against currency depreciation and inflation.5 Similarly, the COVID-19 pandemic saw gold delivering returns at 25.1% in 20204.
Investment Details
The minimum investment amount for the Groww Gold ETF is ₹500, and there is no exit load. The fund is managed by Mr. Wilfred Gonsalves.
For more information, please refer to the Scheme Information Document available on growwmf.in.
Source 1 – Excerpt of Economic Times, May 29, 2024
Source 2 – Business Standard, August 14, 2024
Source 3 – Bloomberg, Investing.com
Source 4 – NSE, Bloomberg, Investing.com, September 27, 2024
Source 5 – Bloomberg, Investing.com, September 30, 2024
Moneycontrol journalists were not involved in the creation of the article.