A Gold ETF has the following advantage:
• No risk of holding physical stock: As GETFs are issued in demat form, the risk associated with holding physical gold is reduced considerably.
• Affordable: GETFs are ideal for small retail investors as they can buy one unit from the exchange. One unit of the fund will represent one gram of gold.
• High Liquidity: GETFs can be easily bought / sold like any other stock on the exchange during market hours at real-time prices as opposed to end of day prices.
• Lower cost: GETFs enjoy the benefits of lower cost and higher transparency. As they are listed on the exchange, costs of distribution are much lower. Further, exchange traded mechanism helps reduce minimal collection, disbursement and other processing charges. Gold futures include the cost of carry that will be absent on a GETF.