Goldman Sachs GS Gold Bees ETF: A Good Investment To Diversify Your Portfolio

Investment

oi-Sunil

By Sunil Fernandes

Updated: Wednesday, October 7, 2015, 9:00 [IST]

Goldman Sachs (GS) Gold Bees ETF (GS Gold Bees) is among the gold ETFs in the country that track domestic gold prices. It is among the largest Gold ETFs in India and has a corpus of close to Rs 1800 crores.

How do these Gold ETFs actually invest your money?

Gold ETFs are funds that invest your money in ETFs investing in physical gold. They track physical gold prices in India. What this means is that when gold prices across India rise, we see a rise in the value of Gold ETFs.

The question that investors often ask is: Why should I invest in gold ETFs in place of physical gold? There are a number of reasons for the same. Investing in physical gold has a number of problems. One is that if you buy sizeable quantities of gold, you may have to hire a big bank locker. There is always a threat of robbery, which is another challenge. Each time you want to sell you have to carry the same with you.

These all are eliminated in a Gold ETF. You can sell instantly through the electronic route. There is no question of theft nor is there any worries of storage, since these are held in the electronic form.

A review of Goldman Sachs GS Gold Bees ETF

You can buy GS Gold Bees ETF if you are confident that gold prices across the globe would move up or because you want to diversify your portfolio.

Now, let's explain the first. It is very difficult to say where gold prices would be headed in the near future. But, gold as an asset class is a good investment only if you need to diversify. For example, at the moment if you have investment in financial assets like shares, bonds etc., and also in fixed assets like real estate, it makes sense to invest in gold as well.

This is because if there is a sudden collapse in financial markets like the a Lehman Brothers type crisis, having gold in your portfolio would help.

Goldman Sachs (GS) Gold Bees ETF tracks domestic gold prices. Interestingly, there is no entry and exit load and the expense ratio of the fund is placed at 1.5 per cent.

Returns from GS Gold Bees ETF

	1 Year	3 Year	5 Year
Returns from GS Gold Bees ETF	-1.30%	-6.02%	5.00%

As can be seen from the above table the returns in the last three years has been negative. This is because there has been a slow global economic recovery and people have preferred financial assets to gold.

Going forward there is a big risk for gold prices in terms of the US Federal Reserve hiking interest rates in the US. Should that happen, we could see a drop in the prices of gold. Therefore, as suggested invest in the GS Gold Bees ETF only if you do not have gold in your portfolio.

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