IDBI Bank Gold Schemes

Features

1. The scheme is an open-ended gold exchange traded scheme.
2. The scheme adopts a passive investment strategy by investing in physical gold with an objective of replicating gold performance in domestic prices.
3. The investment will include physical gold, money market instruments and debt securities.
4. During NFO, the minimum application amount is Rs.10,000 and in multiples of Re.1 thereafter.
5. The allotment price will be set at around the price of a gram of gold.
6. The NFO price is set at Rs.100 for cash at a premium which will be equal to the difference of the allotment price from the face value of Rs.100 each.
7. The mode of investment will be through a demat account.
8. The risk level of this investment is moderately high.
9. After one year from the date of allotment, the investment is subject to long term capital gains tax.

Benefits

1. Every unit of the IDBI Gold Exchange Traded Fund is backed by 24-karat gold that is 99.5% pure.
2. The gold is held by a custodian.
3. The ETF is issued through a demat account therefore reducing the risk associated with holding physical gold.
4. This investment is ideal for small retail investors as they are allowed to buy even a single unit representing 1 gram of gold.
5. The investment is liquid as it can be easily sold or bought on the stock exchange. The ETF units can be sold at real-time prices during market hours rather than end of day prices.
6. The investment is tax efficient and avoids wealth tax.
7. Charges for brokerage are much lower on ETFs than on purchasing physical gold.

Asset Allocation

IDBI Gold Fund

The IDBI Gold Fund works in tandem with the IDBI Gold Exchange Traded Fund. Investors can purchase units of the IDBI Gold Exchange Traded Fund and reap the corresponding returns. Customers can also invest through systematic investment plans rather than lump sums. The fund seeks returns through majority of the investment in Units of IDBI Gold Exchange Traded Fund and the rest in IDBI Liquid Fund Scheme of IDBI Mutual Fund, Short-Term Fixed Deposits, Reverse Repo, and Money Market Instruments.

Features

1. The objective of this investment is to generate returns that closely correspond to the IDBI Gold Exchange Traded Fund returns.
2. The face value is set at Rs.10 per unit for cash at par.
3. To invest in this fund, a minimum of Rs.5,000 is required. Post the minimum requirement, investments can be made in multiples of Rs.1.
4. Investors can make an additional investment with Rs.1,000 minimum and in multiples of Re.1 thereafter.
5. The investment risk profile is moderately high.
6. Short term and long term gains are subject to taxes as applicable.

Benefits

1. The fund allows investors to invest in gold without actually handling the physical asset.
2. Investors can opt for Systematic Investment Plans on a monthly or quarterly basis.
3. The plans available are regular and direct.

Systematic Investment Plan (SIP)

Investors can opt to make contributions to the fund in monthly or quarterly instalments.

1. Monthly Investment - A minimum of Rs.500 per month is required for at least 12 months. Investors can choose to invest Rs.1,000 per month for a minimum of 6 months.
2. Quarterly Investment - A minimum of Rs.1,500 per quarter is required for at least 4 quarters. Investments can be made above the minimum amount in multiples of Re.1.

Asset Allocation

Investing in the Gold Exchange Traded Fund and Gold Fund comes with its risks but can prove to be profitable as gold is an ever-rising metal. Gold has been a metal that is constantly in demand and now investors can get returns on gold without making gold purchases.