Diwali Dhamaka: Zerodha Gold ETF FoF To Open From Oct 25-Nov 8 For Subscriptions; SIP Starts At Rs 500

India's leading online stock broking firm, Zerodha has introduced its new scheme Zerodha Gold ETF FoF (Fund of Funds), an open-ended, fund fund scheme investing in units of Gold ETF. The scheme is launched a few days ahead of the Diwali festival when demand for gold and gold-related schemes is high.

Investors will be allowed to subscribe to the scheme from October 25, 2024, which will be open till November 8, 2024.

Zerodha's Gold FoF is a passive investment strategy, where about 90% to 100% of investors' amount will be allocated to gold ETF. The scheme is expected to offer lower volatility since gold has a low co-relation to the equity market.

Vishal Jain, CEO, of Zerodha Fund House said, "Gold is commonly seen as a commodity that retains its worth and buying power in times of inflation. This fund provides a convenient and effective method for investing in gold without worrying about storage or security."

"As Gold has a low correlation with equity, it helps to lower the overall volatility of your investment portfolio," Jain added.

Further, Vaibhav Jalan, CBO, Zerodha Fund House also commented on the launch, "Our Gold FoF is designed to make gold investing easier and more accessible for everyone. The option to invest via SIP allows investors to gradually build their exposure to gold over time, making it an ideal solution for both first-time and seasoned investors."

According to the official statement, Zerodha Gold ETF FoF is a scheme with a passive investment strategy which will invest in units of underlying Gold ETF. The investment objective of the scheme is to seek capital appreciation by investing in units of Gold ETF, which is in turn linked to the performance of physical gold in the domestic market.

Additionally, Zerodha Gold ETF FoF will invest 95%-100% in units of underlying Gold ETF while 0%-5% fund allocation will be in debt securities and money market instruments.

Investors can do SIP in the latest Gold ETF FoF scheme of Zerodha. The minimum amount for application is Rs 500 and in multiples of Rs 1 thereafter. The starting Net Asset Value (NAV) of this fund will be around Rs 10.

Zerodha Fund House is an Asset Management Company, a JV between Zerodha Broking Ltd and Smallcase Technologies Pvt Ltd. Zerodha Fund House will enable a new generation of investors to access the capital markets with the same principles of simplicity, cost-effectiveness, and transparency to investment products as its parent organizations.

What Are Gold ETFs?

An exchange traded fund (ETF), a gold ETF is listed on stock exchanges BSE and NSE, and is a passive investment instruments whose performance is based on gold prices. In short, gold ETFs are digital gold rather than physical yellow metal.

As per AMFI, buying Gold ETFs means you are purchasing gold in an electronic form. You can buy and sell gold ETFs just as you would trade in stocks. When you actually redeem Gold ETF, you don't get physical gold, but receive the cash equivalent. Trading of gold ETFs takes place through a dematerialised account (Demat) and a broker, which makes it an extremely convenient way of electronically investing in gold.