Investors of gold exchange traded funds (Gold ETFs) may be smiling all the way as the returns from such funds have out performed the returns from the BSE Sensex in the last one-month. Gold ETFs are the only product in the MF category that has outperformed Sensex return as all other thematic funds except banking have posted return inline with Sensex or have underperformed the BSE benchmark.
Gold ETFs have given a return of 5.22% in the last one-month, while amidst high volatility in the secondary market, the 30-share Sensex of BSE during the same period has given around 4% return.
?The difference of the expense is what makes the difference,? says Dhirendra Kumar, CEO Value Research. ?ETFs are inherently very low-cost funds. While an actively managed mutual fund (MF) equity scheme deducts an expense of up to 2.5%, the expense in ETFs are generally in the range of 0.3% to 1%. With compounding, this builds up to a significant difference over time. This is the main reason why ETFs have been able to outperform the BSE Sensex,? he said.
Presently there are three fund houses that are offering Gold ETFs. UTI MF and Kotak MFs? Gold ETF has given 5.23% return, while the Gold ETF from Benchmark Asset Management stable has given a return of 5.21%.
A fund manager managing a Gold ETF said that the popularity of ETFs are increasing. ?The fact that Gold ETFs can be bought and sold throughout the day at the current available price can be a better way of trading in the broader market than a normal index fund, which is available only at day-end NAV.?
Even the returns from some of the thematic funds in the last one-month has out-performed their respective sectoral BSE indices. Like banking schemes offered by MFs, which has given 4.20% return, while the BSE Bankex has given 3.69% return in the last one month.