Gold ETFs gain favour; choose ones with low cost, minimal tracking error

More investors now adhere to the principle of asset allocation. "Increasingly, they treat gold as a financial asset in their portfolio rather than just as jewellery," says Vikram Dhawan

About 95 per cent of India’s gold demand is in the physical form. Over the past years, however, holdings in gold exchange-traded funds (ETFs) have surged over 200 per cent  —  from around 21 to over 63 tonnes  — attesting to their growing popularity.

 

Gaining traction

 

Gold’s strong performance — a return of around 32 per cent over the past year — has been a key driver. “The post-pandemic world has been marked with uncertainty on the macroeconomic and geopolitical front. This has kept gold, considered a safe haven in times of risk aversion, relevant. Inflation has been on the