Price Pattern of Gold Exchange Traded Fund in India

Abstract

Exchange Traded Funds (ETF) are increasingly getting more acceptance as a good avenue of investment among Indian investors. Exchange Traded Funds are basically a typical type of Mutual Fund scheme that are listed in the stock exchanges like other common stocks. ETF blends the features of both mutual fund units and common stocks which are traded in stock exchanges. Unlike other Mutual Funds, ETFs are traded in the secondary market providing full liquidity to the investors and it also conforms to some basic features of stock. ETFs are priced continuously and can be bought /sold any time during the trading hours. In India, the portfolio of ETFs is either composed of physical asset like gold, money market instrument or securities by tracking certain index (e.g. Nifty or Banking index). Gold ETFs have captured maximum amount of investment and which is nearly double of Equity ETF as experienced in our country. As ETFs are traded in stock market, a real time price is discovered continuously in the stock exchange as well as the intrinsic value of each unit is also notified by the fund house at the end of every day as NAV. The study aims at identifying the potentiality of gold ETF in constituting efficient portfolio along with conventional security market instruments. It has been observed that in designing risk adjusted portfolio, physical gold is better than Gold ETF because degree of correlation coefficient between security market (Nifty) return and physical gold return is always lower than correlation coefficient between index return and return discovered in secondary market of Gold ETF for all the major Gold ETF schemes.

DOI - https://doi.org/10.65525/SVUP.9788199651586.2026.69-79