Bengaluru: Groww Mutual Fund has announced the launch of the Groww Gold ETF, offering investors a simple, cost-effective way to invest in gold. The New Fund Offer (NFO) will be open from 7th October to 18th October 2024.
The Groww Gold ETF is an open-ended Exchange Traded Fund (ETF) designed to closely track the domestic price of high-purity physical gold (99.5%). This ETF allows investors to gain exposure to the gold market without the challenges of physically purchasing, storing, or insuring gold.
Growing interest in gold ETFs in India, driven by their perceived safety, potential returns, and convenience, makes this a timely offering. Following a 9% reduction in gold prices due to the customs duty cut in the July 2024 Budget, the investment environment is favorable. In July 2024, gold ETF investments surged to ₹1,337.4 crore, marking the highest net inflows since February 2020. Total inflows between May and July 2024 reached ₹2,890.9 crore.
Key Investment Details:
NFO Period: 7th – 18th October 2024
Minimum Investment: ₹500
Exit Load: Nil
Fund Manager: Mr. Wilfred Gonsalves
Aligned with Gold Price Movements: The ETF mirrors the price of gold, offering investors the potential to benefit from the metal’s performance, subject to tracking errors.
Regulated and Transparent: SEBI regulates the Groww Gold ETF, ensuring transparency and security. Held in Demat accounts, the investments are backed by traceable, high-quality gold.
Gold as a Hedge: Historically, gold has served as a hedge against financial crises and inflation. For example, during the 2008 global financial crisis, while the S&P 500 and Nifty 50 fell, gold delivered a positive return of 5.8%.
Convenience and Liquidity: ETF units can be traded on the stock exchange during market hours, ensuring liquidity and price transparency. Investors can purchase units representing as little as 0.01 grams of gold, offering flexibility to a wide range of investors.
Collateral and Tax Benefits: The Groww Gold ETF can be used as collateral for loans, providing additional financial utility. Long-term investors can also benefit from tax efficiency, with LTCG (Long-Term Capital Gains) taxed at 12.5% after a 12-month holding period.
Hedge Against Currency Depreciation: From 2014 to 2024, gold generated 106.76% returns in USD terms, while the INR depreciated from 61.54 to 83.82 against the USD. This translated to a 181.62% return in INR terms, demonstrating gold’s value as a hedge against currency depreciation and inflation.
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