HDFC GOLD Exchange Traded Fund (An Open-ended Exchange Traded Fund)

ETF - “exchange traded fund” means a mutual fund scheme that invests in securities in the same proportion as an index of securities and the units of exchange traded fund are mandatorily listed and traded on exchange platform.
ETFs are an attractive investment avenue due to their lower costs, as compared to other forms of investing, and tax efficiency.  

A Gold ETF is an ETF whose assets are invested in gold bullion with the objective of generating returns that are in line with the performance of gold (and gold related instruments including derivatives - as and when permitted by SEBI) subject to tracking errors.  

These are passively managed funds and are designed to provide returns that would closely track the returns from physical gold in the spot market.  

Unlike physical gold, Gold ETFs are held in demat / electronic form and can be traded on a stock exchange just like buying and selling stocks.  

Gold ETFs score over physical gold, because they eliminate the hassles and drawbacks of physical gold (e.g. impurity risk), are more tax-efficient and allow you to invest in small amounts.  

Gold ETFs are better than Gold Funds because in comparison to Gold Funds, Gold ETFs are less volatile. While gold ETFs invest in physical gold, Gold Funds invest in equities of gold mining companies; and gold stocks are more leveraged to the gold prices than the gold itself.  

Authorised Participants: Application for subscription of Units should be in Creation Unit Size. Each Creation Unit Size will consist of 1,000 units of HDFC Gold ETF and 1 Unit of HGETF will be approximately equal to 1 gram of gold.
Other Investors (including Large Investors): Rs 5,000 and any amount thereafter per application during the NFO period. In case of investors opting to switch into the scheme from the existing schemes of HDFC Mutual Fund (subject to completion of lock-in period, if any) during the NFO period, the minimum amount is Rs 5,000 per application and any amount thereafter.  

The member(s) of NSE or any other recognized stock exchange and their nominated entities/ persons are appointed by the AMC to act as an Authorised Participants for the Scheme. They act as market makers to improve the liquidity of ETF on the exchanges. The APs provide quotes in the exchange and ensure that investors have a ready buyer and seller any time they wish to enter into a transaction during market hours. After the NFO, only AP's and Large Investors can create/ redeem Units directly with the Mutual Fund.
Large investors are investors who buy Units in Creation Unit Size. Presently this size is 1000 Units and is equivalent to 1 kg of physical gold. Large investors can directly create or redeem the Units in lieu of physical gold of 1 kg and multiples thereof from the AMC if they so desire. Please do refer to the Scheme Information Document for more information on the same.  

After the NFO, Units of the Scheme will be listed on the National Stock Exchange of India Ltd (NSE). Investors can buy or sell units on a continuous basis on the NSE on which the units are listed during the trading hours on all the trading days like any other publicly traded stock at prices which may be close to the NAV of the scheme.
Subscriptions made through Stock Exchanges will be made compulsorily in demat mode by specifying the number of Units to be subscribed and not the amount to be invested. The minimum number of units that can be brought or sold through the NSE is 1 (one) Unit of HGETF.
Further, the Scheme would be open for subscription (Purchase/ redemption) only for Authorized Participants and large investors in "Creation Unit Size" on all business days from the date of listing at NAV based prices.  

Systematic Investment Plan (SIP), Systematic Transfer Plan (STP), HDFC FLEX STP, Systematic Withdrawal Advantage Plan (SWAP), Dividend Transfer Plan (DTP) and HDFC Flexindex Plan are not available under this scheme.

Currently, there are no Investment Plans / Options being offered under the Scheme. However, the Trustee reserves the right to introduce investment plan / options under the Scheme at a future date in accordance with SEBI (MF) Regulations.

Gold ETFs invest in standard gold bullion with purity (fineness) of 995 parts per1,000 (99.5%) or higher.  

The custodian will accept physical gold only if the gold is in the compliance with the Good Delivery norms specified by LBMA as described in the SID. The Custodian will also ensure that Gold bars deposited with it indicate that the fineness is 995 or above.

No (except for Authorised Participants and Large Investors). Delivery of the gold will be at the location of the Custodian within the jurisdiction of Mumbai.

YGold ETFs schemes are treated like non-equity mutual funds for the purpose of taxation. So, the gains attract short term capital gains (STCG) tax if held for less than one year and long term capital gains (LTCG) tax if the period of holding is more than a year.
For futher details please refer to the Scheme Information Document (SID), which is available on our website http://www.hdfcfund.com/, and at the ISCs/ Bank Collection Centres of HDFC Mutual Fund. Investors can also contact us on 1800 233 6767 (toll free) or send an email at [email protected].
Disclaimer: The responses in the FAQs alone are not sufficient and should not be used for the development or implementation of an investment strategy. It should not be construed as investment advice to any party. While utmost care has been exercised while preparing the FAQs, HDFC Mutual Fund / HDFC Asset Management Company Limited (HDFC AMC) does not warrant the completeness and absolute accuracy or completeness of this information and disclaims all liabilities, losses and damages arising out of the use of this information. The recipient alone shall be fully responsible / liable for any decision taken on the basis of this material. The recipient before investing in this Scheme should make his or her own investigation and seek appropriate professional advice. Please read the Scheme Information Document of the Scheme and the Statement of Additional Information before investing.