I don't understand why Gold ETFs have such different NAVs. How can I compare them and select a good gold ETF?
- Ashish Srivastava
Though all gold ETFs track only one thing- the rupee prices of gold, the NAVs of Gold ETF differ due to different expense ratios, the amount of cash they hold and sometimes even the quantity of gold they represent. While most units of gold ETFs represent one gram of gold, one unit of Quantum Gold ETF for instance represents half a gram. Having said this, the returns of these funds should not differ too much given that they track the same underlying.
While comparing gold ETFs it is good to look at both at their NAV and market price based performance. There could be a difference between the two. While there is not much to choose between ETFs based on returns, we do suggest that you invest in the ones which are not trading at a huge premium to the NAV (you can verify this on the stock exchange) and prefer those with good trading volumes. Goldman Sachs Goldbees, Kotak Gold ETF and UTI's Goldshare have the better trading volumes of the lot.
This article was originally published on February 12, 2015.
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