Know what is Gold ETF, Debt ETF and more | Money-making made easy - Explained in easy steps

What is Gold ETF and how to invest in it: Gold price had been soaring till recently and now it has steadied. Many people are wondering whether they should invest money in it now. Gold is definitely an excellent thing to put your money in to safeguard against financial emergencies - they can be personal or national or even global. For instance, corona pandemic created a global financial emergency. Idea is that it will keep your money safe and even grow your money, depending on the situation. However, buying jewellery is not the right way as it includes making charges and that reduces your profit when you go to sell it. That is where gold ETF comes in. You pay for the yellow metal only and you get profit as per prevailing gold price that day.     

Gold ETF is an excellent instrument to diversify your portfolio that may include stocks, bank FDs etc. So, know here about Equity, Gold and Debt ETFs 

Just remember a diversified portfolio can earn bumper profit for you. 

Benefits of Exchange Traded Funds of ETFs in a portfolio 

What is ETF and how to invest in this? 

What is Gold ETF and how much should be invested in this instrument 

Why to invest in ETFs? 

How to distribute debt-equity ratio in your investment portfolio 

What are the benefits of including ETFs in portfolio 

When is the right time to invest in Gold ETFs 

How many types of ETFs are available and what are the advantages and disadvantages? 

Zee Business Guest Chintan Hariya, Head – Product Development and Strategy at ICICI Prudential clears all doubts  

It is important to keep good funds in the portfolio  

Avoid over-diversifying the portfolio 

Decide the funds depending upon your financial goals  

Over-diversification could have an impact on your investments 

Over-diversified portfolio is difficult to manage 

What is ETF? 

ETF is Exchange Traded Funds 

Many types of securities are there in ETF portfolio 

The returns from ETF are similar to index funds 

They are listed in stock markets and can be purchased or sold 

Benefits of ETF 

It is a viable option for direct trading  

No need to pay advisory or management fees 

ETF also have a relatively lower tax outgo 

ETFs also have low cost of holding   

You get a an ETF certificate just like a stock certificate 

Types of ETF 

Equity ETFs 

Gold ETFs 

Debt ETFs 

What is Gold ETF? 

Gold ETFs are Gold Exchange Traded Funds 

You can invest in this like equity 

The price of Gold ETF depends upon the price of Gold 

Facility of one time or instalments available 

Higher expense ratio than Equity ETFs 

Higher returns possible  

Much better option than investment in physical gold 

Debt ETF 

Very few options available currently in this instrument 

AMCs cab soon bring new debt ETFs 

Expense ratio in debt ETF is very low  

Expense ratio at 0.0005 per cent  

Bharat Bond ETF – 0.0005% 

Equity ETF 

Low expense ratio in Equity ETF  

Expense ratio around 0.05%   

Smart Beta, multifactor ETF has slightly higher expense ratio 

Smart Beta ETF has 0.15 to 0.43 per cent expense ratio 

Why ETFs not so popular option? 

Not much awareness about ETFs among investors 

They prefer to invest indirectly in markets 

Direct trading is a better option 

They score less in comparison to equity mutual funds 

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ETF suitable for Whom? 

ETFs suited for long duration investment 

Good returns on back of lower cost 

Facility of ETF liquidity also available