How you can pave path to prosperity with Gold ETFs
As on Sep 30, 2024, in terms of performance domestic price of Gold (MCX gold) has generated reasonable return. For instance, over last period of 15 Yr. MCX Gold has generated return of 11.1% CAGR whereas Nifty50 has generated return of 12.9%. In short-term, such as over 3-year period, it has generated return of 18% vis-à-vis 14.9% of Nifty50. Over the long run, Gold has exhibited low or even negative correlation with Nifty 50 and helps in risk mitigation. Though investors should note that in the short term, correlation may or may not hold. For example, while in 2008 and 2011, when Nifty 50 gave negative returns, Gold posted strong positive returns, but both the asset classes were negative in year 2015. At current levels, while Gold may not deliver exuberant returns in short term, investors should approach it for portfolio completion and risk mitigation with longer investment horizon with a strategy to buy at Dips or in staggered manner. Backed by reasonable performance, risk mitigation and being a safe haven, investors are naturally inclined to allocate some portion of their portfolio to gold and use gold for prosperity in their wealth creation journey.
However, in terms of avenue, investors tend to face challenge. For instance, for investment, if they purchase physical gold in form of jewelry, bar or coin, they run into risk of purity along with storage risk & cost. Further, physical gold involves making charges which drags down the returns. Lot of these drawbacks of holding gold in physical from has been taken
