ICICI Prudential Gold ETF NFO: Review Analysis & Details (ICICI Gold Exchange Traded Fund)

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 ICICI Mutual Fund House has launched its NFO or New Fund Offer called the ICICI Prudential Gold ETF NFO or ICICI Gold Exchange Traded Fund
In this article, we will analyse how good is this ICICI Prudential Gold ETF NFO, whether this ICICI Prudential Gold ETF offers anything new or unique for the investors and whether the investors should invest in ICICI Prudential Gold ETF .

ICICI Prudential Gold ETF NFO: Review Analysis & Details

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

What are the NFO dates for ICICI Prudential Gold ETF ?
The NFO period for ICICI Prudential Gold ETF will open on 28th June and will close on 27th 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.

What is so unique about this ICICI Prudential Gold ETF?
As investors may have observed for last couple of months, the Gold prices have been shooting up the roof. So it seems that most of the investment management companies or AMC's or mutual fund houses are "making the hay when sun shines" and right now, the sun seems to be shining for the GOLD prices and hence these AMC's are running to introduce new mutual funds, new ETF's or Exchange Traded Funds in Gold. This one from ICICI Prudential is launched now, and HDFC mutual fund house has also launched the HDFC Gold ETF NFO: Review Analysis & Details (Gold Exchange Traded Fund HGETF).
Now coming to this specific Gold ETF from ICICI Prudential Mutual Fund house, again it is the same standard ETF product about which we have already written a lot ETF's or Exchange Traded Funds. For those investors who are new to ETF or Exchange Traded Funds, they are advised to go through this one page tutorial about ETF's: 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 ICICI Prudential 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 proportinate allocation will introduce the tracking error but then once the regular trading commences on Exchanges, 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 ICICI. 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. You can also go short on ETF's if you feel that the prices will come down. Moreover, as the world is moving more and more away from the so called USD or Dollar, and the currencies are getting rebalanced to remove dependencies on dollars, Central banks are more interested in buying Golds from international markets than dollars, Gold will surely be a commodity to watch and its prices will fluctuate. Which way the pricews will go is not known by anyone, but a lot of movements and volatility is expected.
This is a clear indication for the traders and punters to place their bets on Gold. Gold ETF's allow you to do that.

During NFO, the units of this Fund will cost Rs 100 per unit.
Are there any alternatives to ICICI Prudential Gold ETF?
One can look for investments in similar Gold ETF funds from other AMC companies (Gold based ETF's available in India) . HDFC also recently launched it HDFC Gold ETF NFO: Review Analysis & Details (Gold Exchange Traded Fund HGETF)

The ICICI Prudential Gold ETF will be benchmarked to Normal Gold Prices

Investment Options for ICICI Prudential 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 ICICI Prudential Gold ETF

Minimum Investment:
Purchases : Rs. 5000/- and in multiple of Re. 1 thereafter.
No entry load during NFO and zero exit load if traded through Exchanges like NSE or BSE. However, brokerage charges may apply.
Final Thoughts about the ICICI Prudential 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.