Quantum Gold Fund (An open-ended Exchange Traded Fund listed on the National Stock Exchange)

The Quantum Gold Fund (QGF) seeks to offer investors an innovative, cost-efficient and secure way to invest in gold. The QGF is an Open Ended Fund, which is proposed to be listed on the National Stock Exchange (NSE) in the form of an Exchange Traded Fund (ETF) tracking domestic prices of gold.

The investment objective of the Quantum Gold Fund is to provide returns that, before expenses, closely correspond to the returns provided by the domestic price of gold.

The scheme enables investors to participate in the gold bullion market without taking physical delivery of gold, and to buy and sell units just like a stock on any of the recognized exchanges where it is listed. After the NFO, the QGF units are proposed to be listed on the NSE. Investors can buy or sell QGF units through member-brokers on the NSE. The minimum quantity for buying and selling would be at least 1 unit.

Each QGF unit is approximately equal to ½ gram of gold. Thus, even at the current prices of approximately Rs. 1,200 per gram, an investor can buy gold in unit form for as low as Rs. 600.

Investments by the fund will be made in physical gold which would be stored by the custodian and also accompany adequate insurance cover.

If investors purchased gold from the retail jeweller or a bank, it would have meant a straight loss to the extent of the premium paid (which usually ranges from 5 to 20%) and making charges. There are no concerns of quality or theft– The gold backing the ETF is certified by the London Bullion Market Association and stored in vaults of the custodian / sub-custodians. The fund house takes care of all risks of storage and safety.

Gold ETFs thus offer the best of both worlds. The investor has the advantages of owning physical gold, without incurring additional expenses and losses like making charges (for gold jewellery), and bank vault charges (for keeping coins or bars or jewellery).