Union Mutual Fund Files Draft for Union Gold ETF

Union Mutual Fund has submitted a draft with SEBI to launch the Union Gold ETF, an open-ended scheme aiming to replicate the domestic prices of physical gold. Launched for investors seeking returns aligned with gold prices, the fund has a risk-o-meter labelled as “high risk,” showcasing the volatility in gold markets.

Features of the ETF

The New Fund Offer (NFO) price is set approximately at 1/1,00,000th of the 1kg gold price. With no exit load, investors can enter and exit freely. The scheme is listed on the NSE and BSE, allowing trading during market hours. The minimum investment is ₹1,000, followed by multiples of ₹1.

Investment Objective

The fund aims to generate returns mirroring domestic gold prices before expenses. To achieve this, it will invest predominantly in physical gold while maintaining a tracking error within acceptable limits.

Benchmark and Liquidity

The performance of the Union Gold ETF will be benchmarked against the Domestic Price of Physical Gold. Units can be redeemed or created in large batches, known as “creation units,” or traded on stock exchanges in smaller quantities.

Subscription and Target 

Union Gold ETF seeks to collect a minimum of ₹5 crore during the NFO. Investors must ensure a minimum investment of ₹1,000, with units allotted in whole numbers.

Portfolio Management

NAV (Net Asset Value) calculations will be disclosed daily on the fund’s website and AMFI portal. The fund commits to transparency in its holdings, adhering to SEBI regulations for asset allocation and tracking errors.

Suitability and Risks

The ETF is ideal for investors with a high-risk appetite seeking exposure to gold. However, fluctuations in gold prices, market volatility, and regulatory changes are key risks. Since the fund relies heavily on physical gold, storage and handling risks are also considered.

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Mutual Fund investments in the securities market are subject to market risks, read all the related documents carefully before investing.