HDFC Gold Exchange Traded Fund (ETF)
HDFC Mutual Fund has come up with their very own HDFC Gold Exchange Traded Fund (Gold ETF). This is an open ended exchange traded fund which is going to function like any other gold ETFs in India. The new fund offer is open on June 25, 2010 and will be closed on July 23, 2010 before reopening again later, probably in one month of closure of the NFO. This is yet another gold ETF plan in India apart from the other plans like the much famous Gold BeES, Reliance Gold ETF, UTI Gold ETF, Kotak Gold ETF, SBI Gold ETF,
Investment Objective: of HDFC Gold ETF is to generate returns that are in keeping with the gold performance which can be subject to tracking errors.
Asset Allocation: The Gold Bullion will consists of 90% of investment and the balance 10% in debt securities and/or the money market if need be.
Investment Options: During the NFO of HDFC Gold Exchange Traded Fund, there is no particular investment plan or options available but the HDFC Mutual Fund can introduce investment plans or options subject to SEBI Approval.
Entry and Exit Load: No entry load is applicable for this particular HDFC Gold ETF Fund and no exit load if the investor redeems the units directly from the fund with Creation Unit Size.
Minimum Investment: During NFO, each creation unit size will be consisting of 1000 units of HGETF and the one unit of HGETF will be equal to 1 gram gold approximately. Rs. 5000 for other large investors. There is no lock-in period applicable for this gold ETF. The redemption proceeds will be processed within 10 days.
NFO Price: Will be based on the existing gold price in the Indian market.
Investment Strategy: Of the HDFC Gold ETF would be to start investing in domestic market of gold. They will also involve in lending of gold and deposit of gold in banks according to SEBI perusal.
Just like any other Gold ETFs in India, HDFC Gold ETF can prove to be a great hedge against the inflation due to the gold factor and as gold has never let off any investors so far and hence can be a safe bet if invested. One should have at least 10 to 15% of their investment in gold and Gold ETFs are the best way to buy gold rather than as a jewellery (which is the worst form of investment when it comes to gold, but can only be used as an ornamental purpose for ladies) or gold coins or bullions. As gold ETFs are safe and much easier to transact unlike physical gold.
HDFC Gold ETF (Exchange Traded Fund) with its no entry and exit load (with certain conditions) can prove to be the best bet in ETF but it all depends on various factors like their fees, spends, etc. But the best gold ETF in India seems to be the Gold BeES.
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I think the NFO is for large & institutional investors, as a creation unit contains 1000 units.