CA. Amit Daga
(Finance Controller CA. CS. CFA. CIFRS. M.COM. )
30 January 2010
· Objective of the GOLD ETF is to generate returns that closely correspond to the returns provided by in vestment in physical gold in the market (domestic market), subject to track in g error.
· After the closure of NFO, the Units of the Scheme are listed on the Capital Market Segment of NSE or any other Stock Exchange. The Units can be purchased / sold in the stock exchange like any other publicly traded stock. (unlike other open-ended schemes which can be purchased/redeemed in MFSS of NSE or StAR MF of BSE)
· Units of the Scheme are available only in Electronic (dematerialized) form.
· Authorized Participant means the member of the National Stock Exchange of India Ltd. (NSE) or any other Stock Exchange(s) and their nom in ated entities/persons or any person who are appo in ted by the AMC/Fund to act as Authorized Participant.
· Creation Unit is fixed number of Units of Scheme which is exchanged aga in st a predef in ed quantity of physical gold (of prescribed purity) called ‘Portfolio Deposit’ and ‘Cash Component.’
· After the NFO, units in less than Creation Unit Size cannot be subscribed/redeemed directly with the Fund. Authorized Participants and Large Investors can subscribe or redeem the Units of the Scheme directly with the Mutual Fund only in Creation Unit Size at applicable NAV in exchange of Portfolio Deposit and Cash Component.
· In addition to purchase and sale of Units on Stock Exchange, Authorized Participants and Large Investors can directly subscribe to or redeem the Units of the Scheme with the Mutual Fund in Creation Units size at NAV based prices. Authorised Participants and large Investors may in vest in the fund by way of physical gold also.
· The price of the Units on the exchange depends on demand and supply at that po in t of time and underly in g NAV and the units may trade at premium/discount to the NAV
· Each Unit normally have a face value of Rs.100/- each and mostly, each unit is approximately equal to price of 1 (one) gram of gold
· If there is in sufficient liquidity in the secondary market on the Stock Exchanges, the AMC may, at its discretion allow redemption of units in other than Creation Unit size.
· Domestic price of Gold = (London Bullion Market Association AM fix in g in US $ /ounce X conversion factor for convert in g ounce in to k.g. for 0.995 f in eness x rate for US$ in to INR) + custom duty for import of gold + sales tax / octroi and other levies applicable.
· Tax treatment of Gold ETF – Similar to Debt funds.
· Authorized Participants and Large Investors have a choice of in vest in g through 1 kg gold per application and in multiples of 1 KG gold thereafter.