Another mutual fund house is going to make an entry into the Gold based ETF fund offering. This time it is the Indian brokerage and asset management firm called Motilal Oswal India which is going to launch its mutual fund called the Motilal Oswal MOSt Shares Gold ETF.
In this article, we will analyze how good is this Motilal Oswal MOSt Shares Gold ETF NFO, whether this Motilal Oswal MOSt Shares Gold ETF offers anything new or unique for the investors and whether the investors should invest in Motilal Oswal MOSt Shares Gold ETF.
Motilal Oswal MOSt Shares Gold ETF NFO: Review Analysis & DetailsLet's begin with some basic details about Motilal Oswal MOSt Shares Gold ETF.
What are the NFO dates for Motilal Oswal MOSt Shares Gold ETF?
The NFO period for Motilal Oswal MOSt Shares Gold ETF is from 2nd March 2012 and will close on 16th March 2012. After the NFO period, the regular buying, selling and redemption of gold ETF fund units will start.
What is so unique about this Motilal Oswal MOSt Shares Gold ETF?
Motilal Oswal hae launched many ETF's in the past and all of them have come with a unique feature. See the following details to know about their individual offerings:
- Motilal Oswal MOSt Shares M50 ETF
- Motilal Oswal Most Shares NASDAQ-100 Fund
- Motilal Oswal MOSt Shares M100 ETF-Fund
So what is unique about this Motilal Oswal MOSt Shares Gold ETF - this is the one and only Gold ETF which allows investors an option to actually take physical delivery of gold at the time of redemption of the Gold ETF units. That means, I as a investor of Motilal Oswal MOSt Shares Gold ETF purchase the gold ETF units. Say I hold it for few months and now I want to redeem my ETF units. I have 2 options:
1) I can simple sell back my Gold ETF units and get money back at the effective price of my units
2) I can actually ask for physical gold (i.e. the gold bar) instead of taking the money
This is the only Gold ETF in India which is offering this kind of physical gold delivery and this is what sets it apart.
What are the other competitor products available in comparison to Motilal Oswal MOSt Shares Gold ETF?
If not hundred, then nothing less than that are available in terms of Gold ETF's and gold saving funds. Check out the complete list
- All Gold ETF's
- All Gold Saving Funds
What are the risks of investing and trading Motilal Oswal MOSt Shares Gold ETF?
Obviously, you are taking a bet on the gold prices. If the gold prices go down after you invest in this Gold ETF, your investment might suffer a loss. It will not matter whether you have the option of physical gold redemption or money redemption. This risk is borne by the investor.
Another thing is that this Motilal Oswal MOSt Shares Gold ETF requries a minimum investment of Rs. 10000, while other Gold funds and gold saving funds are offering investments for much lower amounts.
Final Thoughts about Motilal Oswal MOSt Shares Gold ETF?
Overall, it is another Gold based ETF. Option of physical gold redemption is good but think about it - why would an investor go for physical gold redemption? Only if he needs the physical gold - say for marriage in the family or similar occassion. And what will he do after getting the physical gold which is in minimum 10 gm gold bar units? He will have to anyways approach the jeweller to convert this gold bar into jewellery.
So overall - option of physical redemtion looks good, but investors need to take a call on its usability as per their own needs.
See List of All Mutual Fund and NFO Articles here
RiddiSiddhi Bullions (RSBL) will be providing the Gold bars for physical redemption, but the redemption will actually happen with T+5 days settlement cycle in case of physical gold redemption - i.e. one needs to wait for 5 days to actually receive the gold bars. Also note that physical delivery is limited to only 22 cities in India as of now, so rest city investors need to keep this in mind. They should check how the physical gold will be made available to them if they reside in other cities.
This ETF will be listed both on NSE and BSE.
During NFO period each unit cost Rs. 10 per unit
Minimum investment Rs 10,000 and in multiples of Re 1 afterwards.
Tax benefit will NOT be available in Motilal Oswal MOSt Shares Gold ETF.
The Motilal Oswal MOSt Shares Gold ETF also claims that it offers discount as compared to gold spot prices. There is no wealth tax for Motilal Oswal MOSt Shares Gold ETF.