Can anyone tell if there are any risks (not talking talking about underlying gold price movement risk) in gold mutual funds like https://www.valueresearchonline.com/funds/13190/sbi-gold-fund . I see that people prefer gold etf fund to this. What could be reason?. I know one is exchange traded and the other one one is mutual fund ( with 1% exit load for < 365 days). In fact return wise, the mutual fund return is slightly higher than etc. Are there any liquidity risks in mutual fund route?. Doesnât etf also not have the liquidity risk?. Would appreciate any input. I think buying via mutual fund will be much simpler.
On which months the interest is paid on SGBs? Are they based on standard yearly calendar like paid on June and Dec? Or the dates depend on the SGB series like if itâs a Feb series bond, then the interest is paid on August and then next Feb?
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no their is no standard calander payment for int. easy way to identify the approx int payment date is read the goldbond series symbol. eg SGBMAY25, indicates may is int payment month and six months after that ie november , and 2025 is redemption year.
exect date int payment of sgb may 25, u will get from bse site
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Thanks @HIMSHAH for responding. Your answer helped.
I have 1 more query - What is the ideal way to select a SGB series? I donât see much discount right now going on in any of the tranches on the exchanges. In this scenario, how do we select a particular SGB bond?
Thanks!!!
Earlier the series less discount u will get from market rate. Recent series has more liquidity. Itâs on u for how many years u want to invest in gold.
My take is In following presence.
buy any series where u get discount.
If rate are same in two series buy the bond wich has early maturity.
To long term Gold ETF investors, how do you decide upside potential from the current market prices ?
After how many days are the SGBs credited into demat if one applies for a series during the window? I am guessing it will be available on the listing day. Please correct me if wrong.
Also, are the gains on SGBs taxed if redeemed after 5 years with the RBI? I was looking this up online and i found conflicting details. some articles are saying the gains will be taxed and some are saying that it is tax free even if someone redeems after 5 years.
Can anyone help whether SGB or Gold ETF?
Which is best for strategic allocation to gold in overall portfolio
SGB has lockin for 8yrs. It is best used by people who want to buy gold for children marriage at later age. They can lock the current gold rate and will get 2% interest per annum as bonus. Also it has sovereign guarantee ie highest level of safety.
Gold ETF is for people who want to trade and deal in gold for short duration. The return will be slightly lower due to management fees and tracking error.
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sorry to correct you. SGB are listed in NSE and BSE both exchange. one can easily buy and sell their , and not only that their many times SGB are available at rates cheaper then issue price of latest bonds .
their is prectically no lock in in SGB. ETF one dont get interest.
SGB in secondary market cannot be relied upon for liquidity. You will have to sell it at significant discount it you donât want to hold till maturity.
Gold ETF obviously donât give interest. Its return due to appreciation of gold prices will be lower than physical gold due to fees and tracking error.
SGB are tax free if held till maturity but Gold ETF attracts capital gains tax. Physical gold provides lower return than even ETF since you end up paying making charges, GST etc. at the time of purchase (which are lower than the brokerage & associated costs in case of ETF). Thus in case of physical gold, there is always a mark-up during purchase and discount during sale leading to lower returns.
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Can someone explain how the pricing of Gold ETF done?
Current gold price is 44866. For GOLDBEES, underlining is 0.01 gm of gold. So, its price should be Rs. 44.8. However, its trading at Rs. 39.1. Why?
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TER gets reduced from NAv
What is TER?
The difference in price is 13%. Thats huge.
TER is total expense ratio.
The expenses for running the scheme is reduced by the MF from the NaV.
I hope this answers your query.
Hello Everyone,
Is anyone interested in investing SGB new series? If so what do you think- is investing in IPO is better or buying in secondary market (once listed in zerodha etc).
I heard buying in secondary market, usually gets discounted price. Any other pros and cons?
What do you think of investing in gold bonds in present scenario , considering equity bull market and fall in gold prices ?
The initial lots held till maturity are tax-free on maturity payout.
Pros of SGBs: redemption is tax-free. Interest payouts while not much(2.5% pa, payable half-yearly) are better than nothing. No trailing error/expense ratios to worry about. In case of emergency, liquidity through the secondary market. No GST(which is charged on gold through gold lockers).
Cons: No clarity on when the bonds will be issued, so canât plan your investments. Overall ceiling limit of 4kgs per family, though might not affect most of us retail investors. Canât hold beyond the redemption date- not sure if we will have more bonds then to repurchase.
I have been moving my non-physical gold investments from ETFs and gold lockers to SGBs as and when possible. I donât hold any debt funds, so to me this is a (hopefully) counter balance to my equity. Idea is to build enough till my extra stretch limit, so in case of an emergency and the markets are down(I donât like to sell my core portfolio stocks unless absolutely necessary/I lose conviction), this should hopefully be protected enough to liquidate. Time will tell if this will work out.
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