Zerodha Gold ETF FoF

Zerodha Gold ETF FoF (an open-ended Fund of Fund scheme) primarily invests in units of Gold ETF, which tracks the performance of the Domestic Price of Physical Gold. 

This FoF provides a unique and convenient way to invest in gold, which has historically shown the potential to add stability during market volatility while providing asset class diversification to your portfolio. This FoF allows you to diversify your exposure to Gold without the complexities of storage of physical gold.

1. What is Zerodha Gold ETF FoF?

Zerodha Gold ETF FoF is an open-ended fund of fund scheme investing in units of Gold ETF, which tracks the domestic price of physical Gold. This fund provides a convenient way to gain exposure to gold without the complexities of physical ownership.

2. What are the benefits of investing in Zerodha Gold ETF FoF?

Diversification: Gain exposure to Gold as an asset class in the digital form.

Inflation Hedge: This may protect your investments against inflation and currency fluctuations.

Accessibility: Start your investment journey with a low minimum investment requirement.

3. How to invest in Zerodha Gold ETF FoF?

You can invest through various direct investment platforms such as Coin, Groww, Paytm Money, ETMoney, CAMS Online, MF Central, etc.

4. What is the minimum amount required to invest in Zerodha Gold ETF FoF?

The minimum investment is ₹500, and you can invest in multiples of ₹1 thereafter during the New Fund Offer. After the initial offer period also, the minimum investment remains ₹500, with subsequent investments in multiples of ₹1.

5. What are the risk factors for investing in Zerodha Gold ETF  FoF?

The scheme is classified as high-risk. Investing in a Gold FoF involves market risks associated with the price fluctuations of gold, etc. As with any investment, it's essential to assess your risk tolerance and consult a financial advisor.

6. What is the difference between Zerodha Gold ETF FoF and Zerodha Gold ETF?

Zerodha Gold ETF FoF: A Fund of Fund scheme that invests in units of the Gold ETF, providing diversified exposure without requiring physical gold ownership. This fund also provides the flexibility of investing via the Systematic Investment Plan (SIP) route.

Zerodha Gold ETF: A direct investment in gold that tracks the price of physical gold, requires a demat account for transacting in this scheme.

7. How is the NAV calculated for Zerodha Gold ETF FoF?

The NAV per unit is calculated using the formula:

NAV (₹) per Unit = (Market Value of the Scheme’s Investments + Current Assets - Current Liabilities and Provisions) / No. of Units Outstanding. 

8. When will I be able to track the units of Zerodha Gold ETF FoF?

You can track your units of Zerodha Gold ETF FoF once allocated, typically within 4-5 business days after the NFO closing date, on the platform where you invested.

9. Does Zerodha Gold ETF FoF track the prices of physical gold?

Unlike the Gold ETF which directly tracks the price of domestic physical gold - this fund invests in units of Gold ETF and accordingly tracks the closing price of the underlying ETF on the respective exchange. 

10. What are the top holdings of Zerodha Gold FoF?

The top holdings of Zerodha Gold ETF FoF will primarily consist of investments in units of Gold Exchange Traded Funds (ETFs). Under normal circumstances, the asset allocation^ of the Scheme is as follows:

Units of Gold ETF: 95% to 100% of total assets.

Debt Securities and Money Market Instruments: 0% to 5% of total assets.

^Refer SID for complete details.

11. Where can I track the performance of my investment in Zerodha Gold FoF?

You can track the performance of your investment on the app or on the platform from where you have invested. 

12. Can I set up a Systematic Investment Plan (SIP) in Zerodha Gold FoF?

SIP in this scheme can be registered once the scheme re-opens for further subscriptions.

13. What is the fund’s expense ratio, and what fees should I expect?

The Expense Ratio of the Scheme will be available and disclosed on the website once the Scheme re-opens for continuous subscription. 

14. What factors should I consider before investing in a gold fund?

You may consider factors such as portfolio allocation, exposure to gold as a part of asset class diversification and your overall investment goals. Please note it is always advisable to consult a financial advisor before making any investment decision.

15. What is the fund's investment strategy?

The fund's investment strategy^ is to invest in units of Gold Exchange Traded Fund (ETF) to generate returns linked to the performance of the Gold Exchange Traded Fund (ETF). The fund will maintain its investments in the underlying Gold ETF regardless of current gold prices or future market outlooks, aligning with its investment objective of consistent returns based on the underlying asset.

^Refer SID for complete details.

16. Is a Demat account necessary to invest in the Zerodha Gold ETF FoF?

No, a Demat account is not necessary to invest in the Zerodha Gold ETF FoF.

17. What happens if my application for Zerodha Gold ETF FoF is rejected?

If the application is rejected, the full amount will be refunded within 5 business days of the closure of NFO.

18. Zerodha Gold ETF FoF is suitable for what kind of investors?

Zerodha Gold ETF FoF may be suitable for the following category of investors:

Retail Investors: Those looking to invest in gold without directly purchasing physical gold. It provides an opportunity to benefit from gold price movements without storage or purity concerns.

Long-Term Investors: People looking for portfolio diversification with gold as a hedge against inflation or economic uncertainties.

Conservative Investors: Those who want to add less volatile assets to their portfolio as gold has historically been seen as a safe haven in volatile markets.

Investors with Demat or Non-Demat (SOA) Accounts: Both types of account holders can invest, as the scheme is open to all.

Corporate Investors: Those who are looking to enhance their Gold exposure in their treasuries.

19. Taxation of the Zerodha Gold ETF FoF

Zerodha Gold ETF FoF shall be subject to the following taxation norms:

Short-term Capital Gains shall be triggered if the holding period of the investor under this scheme is up to 24 months at the time of redemptions. The gains will be taxed as per the tax slab of the investor (plus 4% cess and applicable surcharge(if any).

Long Term Capital Gains shall be triggered if the holding period of the investor exceeds 24 months at the time of redemptions. The Gains will be subject to 12.5% taxation. (plus 4% cess and applicable surcharge (if any).