InvestorQ : What are the charges associated with gold ETFs?
shivani Walawalkar made post

What are the charges associated with gold ETFs?

Anusha Savla answered.
3 years ago

Gold ETFs or exchange traded funds are open-ended mutual fund schemes that invest only in gold. One unit of ETF is equal to one gram of gold and vice versa and the minimum you can purchase is one unit. Like a stock, you can buy or sell these ETFs on the stock exchange.

There aren’t any entry or exit charges on gold ETFs, but there are three costs associated with them:

- Expense ratio (for managing the fund), which is generally lower compared to other mutual funds and is around 1 percent.

- Broker cost that needs to be accounted for every time you buy or sell units.

- Tracking error: It is not a charge but impact the returns you earn. It arises because of the fund's expenses and cash holdings thus not mirroring actual gold prices.