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The following are the features of a gold ETF:
Similar to shares and stocks, gold rates on the stock exchange are available to the public. You can find out the value of your portfolio simply by checking the rates of gold for the hour or day.
The minimum lot or bundle that needs to be bought in order to start trading in ETFs is one unit i.e., one gram of gold. You can sell and buy the units via your ETF fund manager stockbroker on a daily or hourly basis, similar to equities.
There is no exit or entry load if you invest in a gold exchange traded fund that is listed on the stock exchange. This is a charge that that is paid in order to sell or buy units. The brokerage charges involved in such a transaction are very low.
The fluctuations in gold rates are not as high as equities in most cases. Therefore, even if your returns on equity investments are falling, gold ETF can act as a safety net by preventing you from incurring large losses.
The following are the risks tied to a gold ETF:
Similar to an equity product, the Net Asset Value of the units held of the gold ETF can fall or rise depending on the economic fluctuations.
The additional fee and charges such as the commission, brokerage, or fund management fee that are involved in maintaining a gold ETF can bring down the total returns when compared to a sale of physical gold.
Keeping in mind the rising preference for gold investment, exchange traded funds are a good option if your intention is only to invest in gold and not possession the precious metal as an ornament. If you are one of the regular investors in the market, there are many reasons as to why you should consider the gold ETFs in addition to your regular portfolio. Some of the factors are: