Each year, as Akshaya Tritiya approaches, many Indian households mark the day by buying gold, and in May 2021, with the country still locked down against the pandemic, a Financial Express explainer took up the old ritual to ask whether there might be a quieter way to hold the metal. Its answer, offered largely through the voice of an ICICI Prudential AMC strategist, was the gold exchange-traded fund: bullion held electronically, purchasable in small units, free of the storage worries, making charges and purity doubts that attend jewellery and coins. The piece argues this is a more sensible ves
Akshaya Tritiya 2021: Are Gold ETFs a Smarter Bet Than Physical Gold for Building Wealth?
Same gold exposure, held electronically, with no making charges
Mark
Why does a story about Gold ETFs land on Akshaya Tritiya?
Mimi
Because that's when Indians traditionally buy gold. The article is offering an alternative to the jewellery-store trip, especially with the lockdown on.
Mark
What's the core argument?
Mimi
Same gold exposure, held electronically, with lower costs. No making charges of 10 to 20 per cent, no locker, no purity worries.
Luke
Worth noting who's making that argument. Chintan Haria works at ICICI Prudential AMC, which is in the business of fund products. It's one source, and he has an interest.
Mark
Does the comparison table help?
Mimi
It's concrete. Units from about Rs 50, 99.5 per cent purity, trading on NSE and BSE, and a one per cent wealth tax on physical holdings above INR 30 lakh.
Luke
The table lists benefits but not ETF costs. It says expenses are lower, yet gives no expense ratio figure. Without that, the cost advantage is asserted, not shown.
Mark
And the 10 per cent allocation?
Mimi
That's Haria's suggestion, framed as something investors could consider.
Luke
Right, it's one executive's view, not a standard. Tax rules are also as stated in 2021, so check current ones before acting.
Der Puls
- A festival tradition of buying gold collides with a pandemic lockdown that has changed how and where people can shop.
- Physical gold is portrayed as costly and cumbersome, with making charges of 10 to 20 per cent and worries over purity, storage and a wealth tax above INR 30 lakh.
- Gold ETFs are offered as the remedy: units from about one gram, bought online or through an app, traded on NSE and BSE at transparent prices.
- The article steers investors toward roughly 10 per cent gold in a portfolio, yet its single fund-industry source leaves the sales pitch unbalanced and readers are urged to verify tax and fees before switching.
Each year, as Akshaya Tritiya approaches, many Indian households mark the day by buying gold, and in May 2021, with the country still locked down against the pandemic, a Financial Express explainer took up the old ritual to ask whether there might be a quieter way to hold the metal. Its answer, offered largely through the voice of an ICICI Prudential AMC strategist, was the gold exchange-traded fund: bullion held electronically, purchasable in small units, free of the storage worries, making charges and purity doubts that attend jewellery and coins. The piece argues this is a more sensible vessel for a long-term portfolio, though it rests its case on the testimony of someone who sells such products.
Every year around Akshaya Tritiya, buying gold is part of the occasion in India. In 2021 the festival arrived in the middle of a pandemic lockdown, and a Financial Express explainer published on May 14 used the moment to argue for a different way of owning gold: Gold ETFs, sometimes called paper gold, in place of jewellery, coins or bars.
The case rests mainly on Chintan Haria, Head of Strategy and Product Development at ICICI Prudential AMC. Gold ETFs hold bullion electronically, so investors avoid safety worries, can buy as little as one unit, and generally pay far less than they would for physical gold. Haria suggests that around 10 per cent of a portfolio could sit in gold, and he notes that the units can be bought from home through a website or app, a real convenience during the lockdown.
The article sets out its comparison plainly. Physical gold brings making charges of 10 to 20 per cent, no guaranteed purity, varying jeweller prices, possible bank locker costs and a one per cent wealth tax above INR 30 lakh. ETFs carry none of these burdens, are described as 99.5 per cent pure, follow international pricing and trade on the NSE and BSE. Tax on capital gains is the same for both: slab-rate tax if held under three years, and 20 per cent with indexation after that.
The piece is promotional and draws on a single executive whose firm sells these funds. Readers thinking of shifting away from physical gold would do well to check current tax rules and fund fees for themselves first.
Every year around Akshaya Tritiya, buying gold is part of the occasion in India, and in 2021 the festival fell in the middle of a pandemic lockdown. A Financial Express explainer published on May 14 used the moment to make a case for a different way of buying: Gold ETFs, sometimes called paper gold, in place of jewellery, coins or bars.
The pitch comes mainly from one person, Chintan Haria, Head of Strategy and Product Development at ICICI Prudential AMC. Gold ETFs, as the piece describes them, invest in gold bullion, much as buying the metal would, but the holding is electronic. Haria says what people often forget is that there is a better way to hold gold without worrying about its safety. Experts cited in the article say an investor can buy as little as one unit, and that the costs tend to be much lower than with physical gold.
On allocation, Haria suggests investors could consider putting 10 per cent of a portfolio into the yellow metal. The article frames gold as one of the asset classes that belong in a portfolio aiming for long-term wealth, since an optimal mix matters more than any single holding. He also notes a lockdown-era convenience: an ETF can be bought from home through a website or mobile app.
Haria lists the advantages as cost-efficient exposure, no worry about purity, no storage hassle, and the ease of buying and selling on exchanges at any time during trading hours.
The article then sets out a comparison. Physical gold usually comes in standard denominations such as 1 or 10 grams, while ETF units start at 1 gram, which the piece puts at around Rs 50. Making charges on physical gold run 10 to 20 per cent of the total cost; ETFs have none. Physical gold carries no guarantee of purity, while the ETF is described as 99.5 per cent pure. Jewellers price differently from one another, whereas ETF pricing follows international standards and is described as transparent.
Tax and storage points follow. The article says a one per cent wealth tax applies if an individual's physical gold exceeds INR 30 lakh in value, and that this does not apply to ETFs. Storage for physical gold may mean bank locker costs, while ETF units sit in demat form. Physical gold can be bought from jewellers or banks, but selling or exchanging generally runs through jewellers. ETFs trade on the NSE and BSE.
Returns are calculated differently. For physical gold, the article gives the current price minus the buying price plus making charges on an ornament. For an ETF, it is the current NAV, the price of a unit on the exchange, minus the purchase NAV. Capital gains treatment is the same for both: held under three years, gains are taxed at the income tax slab rate; sold at a profit after three years, the tax is 20 per cent with indexation.
The piece is promotional in tone and leans on a single fund executive whose firm sells such products. Readers weighing a move away from physical gold would do well to check current tax treatment and fund fees themselves before changing their allocation.
Bemerkenswerte Zitate
Investors could consider allocating 10 per cent of a portfolio to gold, and Gold ETFs can be bought from home via website or app.— Chintan Haria, ICICI Prudential AMC
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