An outlook on investing in gold ETFS with special reference to small investor's

This paper presents the features, pros and cons and various types of Gold ETFs which acts as a positive catalyst for the investing by small investor’s
Nội dung trích xuất từ tài liệu:
An outlook on investing in gold ETFS with special reference to small investor’s INTERNATIONAL JOURNAL OF MANAGEMENT (IJM) ISSN 0976-6502 (Print) ISSN 0976-6510 (Online) IJM Volume 7, Issue 2, February (2016), pp. 291-297 http://www.iaeme.com/ijm/index.asp ©IAEME Journal Impact Factor (2016): 8.1920 (Calculated by GISI) www.jifactor.com AN OUTLOOK ON INVESTING IN GOLD ETFS WITH SPECIAL REFERENCE TO SMALL INVESTOR’S Dr. G. Radhika Assistant Professor, Department of Commerce, Valluvar College of Science and Management, Karur ABSTRACT Finance is one of the basic foundations of all kinds of economic activities. It is the master key which provides access to all the financial sources for being employed in all the activities of human. It is often said that human needs money to make more money. However, it is also true that money begets more money, only when it is properly handled. The assortment of option that an investor can desire from at the current moment, making an investment decision can be truly irresistible. From the whole range of investments, ranging from stocks, bonds, real estate, Government securities to unusual metals like gold and silver, an investor must create a portfolio that can effectively help him to meet his or her short, medium and long term financial goals. With gold prices at an all time high right now, many investors are investing towards GOLD ETFs as an investment avenue. This paper presents the features, pros and cons and various types of Gold ETFs which acts as a positive catalyst for the investing by small investor’s Key words: Finance, Investor’s, Gold investment, Gold ETFs, Securities Cite this Article: G. Rathika. An Outlook on Investing in Gold ETFS with Special Reference to Small Investor’s. International Journal of Management, 7(2), 2016, pp. 291-297. http://www.iaeme.com/ijm/index.asp 1. INTRODUCTION Gold ETFs are exchange traded funds that are meant to track closely the price of physical gold. So gold ETF lets the investors to own gold in their Demat account. Each unit of the ETF lets the investor own 1gm of gold without physically owning it. Thus investing in a gold ETF provides the benefits of liquidity and marketability which are a limitation of owning physical gold. Gold ETF is liquid because you can trade in it at any time during market hours. Gold ETF is marketable because you can trade any amount in it just like a normal stock including short selling and buying on margin. Owning gold ETF also is cheaper than owning physical gold because it has no cost of carry (the cost of storing physical gold). 291 G. Rathika, “An Outlook on Investing in Gold ETFS with Special Reference to Small Investor’s” – (ICAM 2016) International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online), Volume 7, Issue 2, February (2016), pp. 291-297 © IAEME Publication 2. REVIEW FF LITERATURE Paul Baiocchi (2012) in his article stressed that gold ETF’s appear to be same until the expense ratio were valued. The retail gold ETF has increased demand in the previous years and the trend has excelled in the coaring years also. Deepan (2012), investors who were interested in gold has several options. 1. Buying gold jewellery coins or bars and hold them at home or in a safety box, 2) buy gold certificates from a bank a dealer 3) buy gold futures contract 4) buy gold exchanges traded funds. The main problem is liquidity of selling gold. Gold certificates are trusted and safe. Futures contracts can provide a large amount of leverage and are very attractive. But gold ETF offers a wide variety of advantages which provides safety, liquidity and returns. Cary (2013) has stated that the holdings of gold ETF’s have dropped by nearly four million ounces (125 tonned) in the year 2011. It is because that physical market for gold is witnessing roburt support. Since 2004, the gold backed ETF’s are becoming popular since 2004. Which was accelerated the investment in equity markets. Maulzi (2013) in his work has stated that the demand for gold exchange traded funds in India is likely to explode as investors get accustomed to “click and par” mode of investing. He further addes that, gold prices in India have gained 29 percent in the year 2011, and they have added 15 percent gains in the stock market. Vipul (2013) in his research paper that gold ETF invests directly into gold, where as a gold fund invests in a gold ETF. On the other hand, gold funds are bought like regular open ended mutual funds. The NAV of both kinds have higher fund charges as per the fluctuations in the price of gold. The gold fund will be 0.5 percent to 1 percent costlier than gold ETFs. 3. STATEMENT OF THE PROBLEM Conventionally, Indians likes to procure gold and they crave to acquire it. In fact, they hardly go for ETFs. But in India, during the last one year, investment in gold ETFs has risen. India is one of the largest consumers of gold. While conformist investment options like jewellery, gold bars and coins still exist, Gold ETFs are another effectual way to invest in the yellow metal. Most of the investors generally have limited informations about the developments in the securities markets. Informations about the financial performance ...