Investing in gold exchange traded fund (ETF) units may become more attractive proposition for small investors with holdings equivalent to less than a kg of physical gold. This is because such investors can now directly buy physical gold jewellery/gold coins from a jeweller without having to go to a stock exchange for selling their units.
Currently, investors in Gold ETFs with underlying gold equivalent of less than 1 kg do not have any right to get the physical metal. They only get the comfort of indexing the value of their holdings to gold price movements without having to keep the real thing in the almirah.
But now, one jeweller is offering an opportunity for investors to convert their ETF units, even if their holding is small and equivalent to say five to 50 grams, not just to gold coins, but to gold jewellery itself.
The Thrissur-based Jos Alukkas has tied up with Sharewealth Securities Ltd and Benchmark Asset Management Company to enable investors holding Gold ETF units in dematerialised form to walk into a Jos Alukkas showroom and buy gold Jewellery /gold coin against Gold ETFs.
“We are formally launching the scheme of physical redemption of Gold ETF in exclusive showrooms of Jos Alukkas from Friday,” Mr T.B. Ramakrishnan, Managing Director & CEO, Sharewealth Securities, told Business line .
It is not only Benchmark Gold ETF units that will be eligible for this redemption facility, even other high liquidity Gold ETFs from the stable of Reliance, Kotak and UTI will be covered under the scheme in due course, sources said.
Instead of selling the gold ETFs on the stock exchange and then purchasing jewellery/coins after the funds are received from the exchange, an investor can go to Jos Alukkas showroom and buy physical jewellery against their gold ETF units, Mr Ramakrishnan said.