InvestorQ : What exactly are gold ETFs and how big is this asset class?
Dhwani Mehta made post

What exactly are gold ETFs and how big is this asset class?

Khushi Patel answered.
2 years ago

Gold Exchange Traded Funds (ETFs) are units of gold that are issued and the ETF holds physical gold against it with a gold custodian bank. In India, Gold ETFs have been around for over 15 years but they are yet to take off in a big away especially considering that gold prices have been on a secular downtrend since September 2011. Also, the willingness to hold gold in demat form is still to catch up with retail investors in a big way and that has limited the potential of this product, despite being a good addition to your portfolio. In terms of size, the Indian Gold ETF segment is miniscule compared to the global ETF industry. The entire Indian gold ETF AUM is less than $1 billion whereas the world’s largest gold ETF, Spider Gold ETF, alone manages over $35 billion AUM. But the trends in the last few years has been that gold ETFs in India and abroad are seeing continuous redemptions by investors as other asset classes have vastly outperformed gold in the period.