NFO Pick – (360 One Gold ETF)

24 Feb 2025 , 12:16 PM

WHAT YOU MUST KNOW ABOUT 360 ONE GOLD ETF?

The 360 One Gold ETF is a passive gold ETF, indexed to the domestic price of gold. The gold trades in units of 1 gram of gold, with the price set for 24 carat gold by the IBJA. Compared to physical gold, holding gold ETFs is more economical as the cost of storage and insurance is much lower. While the gold fund operates like any regular mutual fund with EOD buy and sell transactions, the gold ETF offers real time gold prices and is listed on the exchange. However, it also means that you need a trading and demat account at the earliest.

Now comes the million dollar question. Since gold and equities have given similar returns in the last 20 years, how do we make a choice? Gold cannot be as competing with equity. For instance, the ratio of gold / gold funds / gold ETFs in the portfolio should not be more than 15%. This excludes the gold jewellery held by you and only refers to gold as an investment. The gold ETFs in India gain from a spike in global gold prices as well as rupee depreciation.

360 ONE GOLD ETF – SOME KEY ADVANTAGES

Here are 5 reasons to invest in the 360 One Gold ETF NFO from a longer term perspective.

• Trading in gold ETFs just requires a trading account and demat account with a broker. Unlike physical gold, you don’t have to worry about storage and loss in churn.
• Gold ETFs are free of value added tax (VAT) and are also free from securities transaction tax (STT). Absence of exit loads makes gold ETFs a lot more attractive.
• With the recent change in the tax structure, long term gains on gold are taxed at just 12.5% (without indexation). This reduces the disadvantage vis-à-vis SGBs.
• Historically, gold has given much better returns than inflation and this is apart from acting as a good hedge in volatile market conditions.
• Gold ETFs are also very liquid since there is continuous buying and selling in the secondary markets. Also, gold ETFs are accepted as collateral for loans.

What makes gold ETFs attractive to investors is a combination of low cost, simplicity of the product, and the combination of global gold prices and dollar defence.

GLANCE AT THE 360 ONE GOLD ETF NFO

Here are key details of the 360 One Gold ETF NFO.

• The NFO opened on February 20, 2025 and closes on February 28, 2025. Regular sale and repurchase of units at NAV linked prices will start within 15 days after closure.
• On the risk-o-meter, 360 One Gold ETF is classified as “Very High Risk” due to its predominant concentration on gold, and gold price volatility.
• Investment objective of the fund is to mirror the Domestic gold price, which is a combination of global gold price and the dollar rupee equation.
• There is no entry load. Being a gold ETF, there will also be no exit loan on retail customers taking an exit loan from the gold ETF.
• 360 One Gold ETF offers Regular and Direct plans, but only the Growth options to investors. Rahul Khetawat will be the designated fund manager for the gold ETF.
• The minimum investment in the NFO and additional purchases will be ₹500. Being an ETF, systematic investment plans (SIPs) would not be possible.
• 360 One Gold ETF will be treated as a listed non-equity fund. STCG (less than 24 months) will be taxed at the applicable incremental rate (including cess). LTCG (over 24 months) will be taxed at 12.5%, but indexation benefits will not be available for the gold ETF.

The 360 One Gold ETF offers a template for parking part of the portfolio in an efficient gold proxy. It not only tracks the global gold price, but also gains from the rupee depreciation, and thus makes it a good dollar defensive too!