Tata Gold ETF: A Comprehensive Guide to Investing

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Posted Jan 2, 2025

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A collection of gold bars and coins symbolizing wealth and investment.
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The Tata Gold ETF is a great option for investors looking to diversify their portfolio with a precious metal. It's an open-ended exchange-traded fund that invests in gold.

The fund is designed to track the price of gold, providing investors with exposure to the metal without the need to physically hold it. This can be a more convenient and cost-effective way to invest in gold.

The minimum investment required to start investing in the Tata Gold ETF is ₹1,000. This makes it accessible to a wide range of investors.

Investment Details

Investing in Tata Gold ETF is a great way to diversify your portfolio and protect against currency fluctuations and inflation.

The trading process is simple and straightforward, allowing you to buy and sell units of gold ETFs with ease.

You can start small, with 1 unit of gold equal to 1 gram of gold, making it a flexible investment option.

Gold prices are transparent and publicly available, so you can always check them online before making a purchase.

Here are some key details about investing in Tata Gold ETF:

Investment Details
Minimum allocation to Gold: 95%
Maximum allocation to Gold: 100%

Investment Objective

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The investment objective of the Scheme is to provide returns in line with those of the Tata Gold Exchange Traded Fund. This is a challenging task, as top performing funds can change frequently, sometimes even daily.

To put this into perspective, the dynamic nature of the market means that even the best funds can shift in a short amount of time. For instance, the Return/Risk of the fund in question is performing poorly compared to its category.

Here are some key facts to consider when evaluating the investment objective:

  • The fund aims to match the returns of the Tata Gold Exchange Traded Fund.
  • The Return/Risk of the fund is lower than its category.

It's worth noting that the fund has an exit load of 0.5% if redeemed within 7 days. This is something to consider when deciding whether to invest.

Frequently Asked Questions

The Tata Gold ETF FoF - Direct Growth plan has a current Net Asset Value (NAV) of approximately ₹12.4229 as of Jan 15, 2025.

You can invest in this mutual fund scheme on ET Money, which is fast, easy, and completely paperless. It only takes a few minutes to complete the process.

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To invest, click on the "Invest Now" button, scan the QR code to download the app, create your account, and complete the KYC process.

The expense ratio of the Tata Gold ETF FoF - Direct Growth is 0.19%, which reflects the fund's management and operating costs.

Here's a quick rundown of the investment process:

  1. Click on the "Invest Now" button at the top right, then scan the QR code to download the app.
  2. Create your account and complete the KYC process, or log in if you're already registered.
  3. Search for Tata Gold ETF FoF and choose either a one-time investment or a SIP. Then, enter your investment amount.
  4. Fill in additional required details, including the bank account you'll use for payment, and confirm.

The assets under management (AUM) of the Tata Gold ETF FoF currently stand at approximately ₹129 Crs crore as of Dec 31, 2024.

About FoF

The Tata Gold ETF FoF has an impressive fund AUM of ₹129 Crs as of December 31, 2024.

If you're interested in learning more about the scheme, you can view the scheme document.

To get a better understanding of the fund's performance, knowing its AUM is a good starting point.

Explore further: Gold Etf Aum

Mutual Funds

Mutual funds are bought and sold from the issuer based on their price at day's end.

You can't buy or sell mutual funds throughout the day like you can with ETFs. This can be a bit of a drawback if you want to make quick trades or adjustments to your portfolio.

Credit: youtube.com, Investing Basics: Mutual Funds

Mutual funds are generally less transparent than ETFs, since their holdings aren't always published online daily. This can make it harder to keep track of what you own and why.

Unlike ETFs, mutual funds can't be sold short, which means you can't bet against them in the hopes of making a profit. This can limit your investment options and flexibility.

Funds Allocation

When investing, it's essential to consider how your funds will be allocated. The allocation of funds will directly impact your investment's risk profile and potential returns.

The minimum allocation to Gold is 95% of the total assets, which indicates a strong focus on this asset class. This is likely due to its perceived stability and ability to act as a hedge against market fluctuations.

Here's a breakdown of the fund allocation:

InstrumentsIndicative Allocations (% of total assets)Risk Profile
Gold (Includes Physical Gold and other Gold related instruments as permitted by SEBI from time to time)95High
Debt & Money Market Instruments including units of Mutual Funds0Medium

Debt & Money Market Instruments, including units of Mutual Funds, can be allocated up to 5% of the total assets. This suggests that while they may offer some level of stability, they are not a primary focus of the investment strategy.

Fees and Trading

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Fees associated with the Tata Gold ETF are relatively low, typically ranging from 0.02% to 1% of the investment value annually.

The expense ratio for the Tata Gold ETF is around 1%, which covers the cost of managing the fund. Broker charges may also apply when buying or selling Gold ETF units.

ETFs, including the Tata Gold ETF, are generally cheaper to operate than mutual funds since they don't have to buy and sell securities or maintain cash reserves for shareholder purchases and redemptions.

Trading the Tata Gold ETF offers flexibility, as it can be bought and sold at current market prices at any time during the trading day, unlike mutual funds which can only be traded at the end of the trading day.

ETFs can also be traded frequently to hedge risk or implement market timing investment strategies, whereas many mutual funds have restrictions on frequent trading.

Some popular ETFs, like the Tata Gold ETF, trade tens of millions of shares per day and have strong market liquidity, making it easy to buy and sell.

Costs and Fees

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ETFs and mutual funds charge annual expense ratios that range from 0.02% to 1% of the investment value. Mutual funds generally have higher annual fees due to marketing, distribution, and accounting expenses.

ETFs are cheaper to operate since they don't have to buy and sell securities or maintain cash reserves. This is a significant advantage over mutual funds.

Stockbrokers may charge commissions for buying and selling ETFs and mutual funds. These commissions can vary depending on the broker.

Sales of ETFs in the US are subject to a transaction fee of $8 per $1 million in transaction proceeds. This fee is paid to the SEC under section 31 of the Securities Exchange Act of 1934.

Many mutual funds can be bought commission-free from the issuer, but some charge front-end or back-end loads. ETFs, on the other hand, do not have loads at all.

Gold ETFs have an expense ratio of around 1%, which covers the cost of managing the fund. This fee is a significant expense for investors.

Broker charges are applicable when buying or selling Gold ETF units.

On a similar theme: Poland Buying Gold

Trading

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Trading with ETFs offers a lot of flexibility and freedom, unlike mutual funds. Investors can buy and sell ETFs at current market prices throughout the trading day, whereas mutual funds can only be traded at the end of the day.

You can execute a range of trades on ETFs, including limit orders, stop-loss orders, and margin buying, which isn't possible with mutual funds. This means you can implement strategies like hedging and market timing with ease.

One of the key benefits of trading ETFs is the ability to trade frequently, which isn't always possible with mutual funds. Many mutual funds have restrictions on frequent trading, but ETFs don't.

Options trading is also available on most ETFs, allowing you to implement strategies like covered calls. Some ETFs even have covered call strategies built-in.

ETFs can be traded through any stockbroker, whereas mutual funds often require you to hold them in an account at the issuing firm. However, some stockbrokers may not allow automatic recurring investments or trading fractional shares of ETFs.

Curious to learn more? Check out: Gold Covered Call Etf

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The liquidity of an ETF can vary greatly, with some trading tens of millions of shares per day and others trading very infrequently. This means that some ETFs might be difficult to sell, especially if they're not very liquid.

Here's a rough idea of what you can expect in terms of trading volume and liquidity:

ETF Trading FrequencyLiquidity
Tens of millions of shares per dayVery liquid
Fewer than 1,000 shares per dayNot very liquid

Keep in mind that the most active ETFs tend to have high trading volume and tight bid-ask spreads, which means the price will fluctuate throughout the day. This is in contrast to mutual funds, where all purchases or sales are executed at the end of the trading day at the same price.

Frequently Asked Questions

Is Tata Gold ETF good to buy?

Tata Gold ETF is a reliable option for investing in gold, offering a secure way to buy and store physical gold. If you're looking to invest in gold, consider Tata Gold ETF as a hassle-free alternative to traditional gold purchases.

What is the price target of Tata Gold in 2025?

The projected price target for Tata Gold in 2025 is ₹15.28. This target suggests a promising upward trend for the company's stock.

Krystal Bogisich

Krystal Bogisich

Lead Writer

Krystal Bogisich is a seasoned writer with a passion for crafting informative and engaging content. With a keen eye for detail and a knack for storytelling, she has established herself as a versatile writer capable of tackling a wide range of topics. Her expertise spans multiple industries, including finance, where she has developed a particular interest in actuarial careers.

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