Gold ETFs may gain traction during Diwali & Dhanteras

Gold ETFs may gain traction during the Diwali and Dhanteras period and investors can consider 5% -10% of their fund allocation in this product, experts said.

Lakshmi Iyer, Chief Investment Officer (Debt) & Head Products, Kotak Mahindra Asset Management Company, said, “Festivities have kicked in yet again and it is that time of the year where gold assumes a dominant position in the buying list. While global turbulence has seen volatility across asset classes, gold remains well positioned, though returns in the near term have been muted. Gold ETFs are a great way to own gold without the hassle of buying physical gold at varied retail pricing. Gold ETF folios have seen a net increase calendar year 2022 to date and we expect this trend to continue going forward as well.”

Added Chintan Haria, Head- Product Development and Strategy, ICICI Prudential AMC, "Buying gold on auspicious occasions is a part of the Indian tradition. Apart from cultural and traditional reasons, gold also has an important role to play in one’s portfolio as that of a diversifier and a hedge against inflation and volatility in other asset classes."

Haria said, "Investors who are considering purchasing gold for investment purposes this Diwali can consider Gold ETFs. Investing in Gold ETF is as good as investing in physical gold. Since Gold ETF is held in Demat, an investor need not worry about storage and safety aspects. Those without a Demat can invest in the Gold Fund of Fund. In terms of purity, Gold ETF purchases gold of 99.5% purity or higher. Moreover, they can be purchased or sold on the exchanges anytime during the trading hours just like equities. Investors can transact for as low as one unit of gold. From an allocation perspective, investors can consider a 5-10% allocation to gold through Gold ETF or Gold FoF in their portfolio."