Gold BeES is an open-ended ETF that is passively managed. The fund's returns are similar to gold returns before accounting for expense and other ETF-associated charges. These are ETF and hence are available for trade on the stock exchange. So, investors are given the opportunity to engage in trade in the instrument during market hours.
How is Gold BeES beneficial for investors?
There are no storage and theft related issues with Gold BeES. Likewise, investors do not have pay that extra cost pertaining to gold designing as in jewellery making.
Other advantage with Gold BeES there is no risk with respect to the purity of gold as Gold ETFs deal in 99.5 percent pure gold.
Also, it is the most active traded as well as liquid form of gold investment.
Nonetheless for holding and remaining put in Gold BeES or Gold Benchmark Exchange Traded Scheme you need a demat account.
During the NFO period, there is a variable entry load structure based on the investment amount.
Also, in comparison to SGBs, gold BeES are available in high volume as there is immense volume unlike SGBs which are also offered in tranches for a limited timeframe.
There is no high margin cost involved in gold ETFs or gold BeES which for physical gold goes between 3-8 percent.
Exposure can be taken in very small quantity of gold.
Long-term capital gains (LTCG) tax at 20 per cent with indexation benefit is applicable on gold ETFs if gains on units are held for more than 36 months. Short-term capital gains (STCG) tax is imposed at the investor's income-tax slab rate if gains on units are held for less than 36 months. This is similar to capital gains on SGBs sold in the secondary market.
Cost in transacting in Gold BeES
Similar to stocks, trading in Gold BeES carrues brokerage cost which is 0.5 per cent of the transaction value and it may differ from broker to broker. Investors can trade in 1 unit of Gold BeES which is equivalent to 1 gm of gold.
Outlook on Gold BeES
So, as a perfect hedge and diversifier, one amid uncertainty such as in the current landscape can bank on gold BeES. Also, these BeES are offered at a lucrative cost structure, so investors basis their long term investment goals can stagger their investment into it.
Points to note when buying into Gold BeES
1. One should factor in the fund's assets under management as well as the average daily turnover
2. Impact cost which provides a sense of the liquidity that the instrument is offering.
3. Tracking error in comparison to the benchmark gold should be the least