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Presented by:
Foram Thakkar
Khushbu Sheth
Palak Thakkar
Soumya Kumar Mondal
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May 2002: Benchmark AMC Filed Offer Document for the firstETF in the world with SEBI
Nov 2006: SEBI amended Custodian of Securities Act
Feb 2007: Gold ETF GOLD BeES introduced in India byBenchmark AMC
Mar 2007: Benchmark Gold ETF Gold BeES listed on NSE.
UTI launched its gold fund UTI GOLD SHARE.
Apr 2007: UTI GOLD SHARE get listed on NSE
July 2007: Kotak gold etf
Jan 2008: Quantum gold etfs
Oct 2008: Reliance gold etf
March 2009: SBI gold etf
Jan 2010: Religare gold etf
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Defi iti
Openended mutual fund scheme Invest m ney c llected fr m invest rs in
standard g ld bulli n(0.995 purity).
Purp se
Track and reflect the price f the g ld. An pp rtunity t gainexp sure t the performanceof
gold
Strategies
Hedge against the inflation & downward dollarmovement and Hedge against stock market
Short term protection Amount ofexposure and management expense ratio
Investors can purchase 1 unit also
InvestorsRequirement
Demat account
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Parameter Gold ETFs Physical Gold
Holding Dematerialized Form Coin, bar etc.
Transparency Very High Very Low
Pricing Will be traded atNSE/BSE, so,
transparent
Not Transparent
Sale Can be done on the
exchange itself
Based on set of
conditions
Wealth Tax No Yes
Short Term Capital
Gain Tax
If sold before 1 year If sold before 3 years
Impurity Risk Nil High
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(Purchases attractingentry load of
4.00%)Unitholders Investment (Rs.) 100
Purchase Price at which Units are
allotted (Rs.)
10.4000
No of Units allotted 9.6154
Amount available to Scheme forinvestment (Rs.)
9.6154*10 = 96.1538
Load Amount utilized for paymentof Broker/Agentscommission (Rs.)
9.6154*10*4.00% =3.8462
Initial Issue expense charged toinvestor
3.8462
Initial issue expense to be borne bythe AMC
Any amount incurredabove Rs.
3.8462
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Initial Issue Expenses Estimated %age ofAmount
Collected
Marketing and Advertising 0.40
Printing and Mailing 0.50
Broker/Agents Commission 3.00
Registrar Expenses 0.05
Bank charges and Other Expenses 0.05
Total 4.00
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Calculation of Redeemed Unitsexplained:
If Exit Load of 1.00% ischargeable
Unit Balance before Redemption A 2305.235
NAV on date of redemption B Rs. 11.0000
Exit Load Chargeable @ 1.00 % C Rs. 0.110 (11 x 1.00%)
Redemption Price D = B C Rs. 10.9890 (11 0.110)
If Redemption request is in Rs E Rs. 3500
No. of Units redeemed F = E /D 318.500 (3500/10.9890)
No of Units left = A F 198 . 35 (2305.235 318.500)
If Redemption request is in Units I 350 Units
Redemption amount will be J = I * D Rs. 384 .150 (350 x 10.9890)
No of Units left K = A I 1955.235 (2305.235 350)
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Return from physical gold
Price of gold
On 16th April,2009=Rs1432.1
On 16th April,2010=Rs1680
absolute return=17.31%
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2006-07 Lack of awareness
Prefer ion physical form
Need of Demat account
Lack of enthusiasms ofdistributors
Brokers are not interestedin chasing clients
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Worldwide there are approximately 2132 ETFs and exchangetraded products (ETPs) available, with more than $700billion in total assets under management
Study of ETFs reveals that they are one of the best optionavailable for the investor to invest in a particular sectorand get high return from that sector when that sector is inboom stage ,since the ETFs do not have any lock in periodit is beneficial for the investor ,he can very easily buy/sell
the ETFs in secondary market and book huge profit or loss
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