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4 Gold ETFs To Buy After A Near 20% Fall
Gold Exchange Traded Funds (ETFs) are now attractively priced and some of them have dropped almost 20 per cent from peak levels. These Gold ETFs track gold prices and can be bought and sold on the stock exchanges. They are much better than buying physical gold like gold bars, coins and jewellery, where there are numerous problems from theft to locker charges to buy and sell margins, which do not make them very lucrative.
How to buy gold ETFs?
You can buy gold exchange traded funds just like you buy shares. Place an order through your broker or online (if you are trading online). They are easily available and very much liquid as well. So, if you have a demat account and trading account with a broking firm, you can buy these ETFs. Most of the gold etfs, have a performance that more or less generate similar returns and hence you can choose any of the gold etfs. Here are a few gold ETFs that you can buy.
4 Gold ETFs You Can Look At
| 1-year returns | 3-year returns | 5-year returns | |
| Kotak Gold Fund Regular plan | 1.9% | 13.10% | 7.75% |
| ICICI prudential Regular Gold Savings Fund | 0.83% | 12.02% | 7.36% |
| HDFC Gold Fund | 2.86% | 12.31% | 7.37% |
| Nippon India ETF Gold BEES | -0.29% | 12.32% | 6.85% |
A drop in gold prices makes these ETFs attractive
A drop in the prices of the precious metal has made some of these gold etfs very attractive. In fact, year to date some of these funds have seen a drop of almost 11 to 12 per cent in value. We would like to state that we are recommending these ETFs largely on account of a drop in gold prices. Over the longer term, equities have generated much better returns than gold ETFs.
However, gold is an excellent means of diversification and putting money solely into equities is a bad idea. There is a possibility that gold could dip a little more from these levels and hence buying systematically every month could help reduce the price risk. It's important to remember that price remains the key while investing. Should some of the Gold ETFs rally even 3 to 5 per cent from here we would not suggest buying into the same.
Factors that have pushed gold prices in India lower
As mentioned earlier, gold prices in India have slumped nearly 20% from peak levels. The Union Budget slashed the duties on gold which pushed prices lower. Apart from this, international prices of gold have also fallen, which has left gold prices at pretty decent levels. In fact, there are worries that inflation would spike across the globe, which has led to a surge in bond yields. This in turn has led to a sharp fall in the price of gold over the last one month. Over the long term it is very difficult to predict the movement of gold.
The precious metal has rewarded investors only over the long term. Hence if you are looking at a tenure ranging from 5 to 10 years, gold could provide returns. For short term investors, equities may be a better choice.
