HDFC Gold ETF NFO: Review Analysis & Details (Gold Exchange Traded Fund HGETF)

It's raining NFO's in the mutual fund market as another mutual fund house has decided to come out with its NFO or New Fund Offer. The HDFC Mutual Fund House has launched its NFO or New Fund Offer called the HDFC Gold ETF NFO or HDFC Exchange Traded Fund
In this article, we will analyse how good is this HDFC Gold ETF NFO, whether this HDFC Gold ETF offers anything new or unique for the investors and whether the investors should invest in HDFC Gold ETF .

HDFC Gold ETF NFO: Review Analysis & Details

Let's begin with some basic details about HDFC Gold ETF.

What are the NFO dates for HDFC Gold ETF ?
The NFO period for HDFC Gold ETF will open on 25th June and will close on 23rd July 2010. Since this is an ETF or Exchange Traded Fund, its units can be traded like shares using intra-day price movements. Although there are no confirmed reports about regular buying and selling, but it is expected to commence after a month of closure of NFO. Although there is no section on HDFC Mutual Fund site about this fund at the time of writing this article, it is expected to come up by 25th June i.e. the launch of the NFO.

What is so unique about this HDFC Gold ETF?
We've written a lot about ETF's or Exchange Traded Funds. It is advisable to go through the An Example & benefits of ETF investing. If you are looking for what are the other Gold Based ETF's available, then here is a list of Gold based ETF's available in India and here is the article about Gold ETF: Historical Performace of Gold ETF in India
The HDFC Gold ETF is an ETF or Exchange Traded Fund (ETF's are our most recommended instruments). It will collect money from investors and generate returns which will be following the gold prices. It is reported that 90% to 100% of the capital will be invested in Gold and the ETF units will be created out of this, the remaining 10% or less will be kept in debt and money market securities to offer liquidity. This is where the tracking error will get introduced. However, since the price of Gold ETF will keep moving as trading proceeds on tick by tick basis, it will be possible to capitalize on trading activities of this Gold ETF from HDFC. One of the main benefits for GOLD ETF as an investment is that compared to physical gold, it does not require and safe storage (it sits in your demat account as shares), it cannot get rusted or eroded in weight as time passes by and you can still capitalize on the daily intra-day price movements by trading in it as a gold stock

During NFO, the units of this ETF Fund will cost Rs 100 per unit. Are there any alternatives to HDFC Gold ETF?
One can look for investments in similar Gold ETF funds from other AMC companies (Gold based ETF's available in India)

The HDFC Gold ETF will be benchmarked to Normal Gold Prices

Investment Options for HDFC Gold ETF : Nothing is clear as of now. Most probably, there will not be any Option, rather than simple Buy and Sell of Gold ETF units in general.
No Tax Benefit is available in the HDFC Gold ETF

Final Thoughts about the HDFC Gold ETF?
This fund can be a good investment for investors willing to bet on gold prices. It can also be a good trading medium for traders who might wish to go long or short.