Understanding Gold Bees: How it Works, Net Asset Value, Returns and More

Gold is still one of the most reliable investment choices in India, traditionally bought physically as jewellery, coins, or bars. All these, however, are subject to practical issues such as storage, purity, insurance, and extra expenses. In order to deal with these problems, the modern financial markets provide smarter alternatives—Gold Bees.

Table of Content

• What Does Gold Bees Mean?
• Gold Bees vs. Gold ETF
• How Does Gold Bees Work?
• Net Asset Value (NAV) of Gold Bees
• Returns from Gold Bees

This investment option offers individuals the opportunity to gain exposure to gold prices via the stock market, which offers the stability of gold along with the convenience, transparency, and liquidity associated with exchange-traded products.

What Does Gold Bees Mean?

Wondering what Gold Bees? Gold Bees, or Gold Benchmark Exchange Traded Scheme, are Exchange-Traded Funds (ETFs) that are meant to track the daily price fluctuations of physical gold. Each unit of Gold BEES represents a fraction of gold, which is supported by actual physical gold bullion of high purity.

 It allows investors to own gold digitally, which can be traded in stock markets throughout the trading hours, without having to carry the metal. It is one of the oldest and most traded gold ETFs in India and is typically issued by AMCs such as Nippon India Mutual Fund under the ticker GOLDBEES.

Gold Bees vs. Gold ETF

When comparing Gold Bees vs. gold ETFs, one should be aware that Gold Bees itself is a gold ETF, but it has a unique position among them.

• Liquidity: Gold Bees has a substantial trading volume and has been in the market for a long time, and these factors tend to make it more beneficial in terms of liquidity relative to most other gold ETFs.
• Issuer: Gold Bees is usually issued by one asset management company, whereas gold ETFs are offered by several fund houses, all with their respective schemes.
• Expense Ratio: Cost ratios may fluctuate throughout the gold ETFs, and Gold Bees tends to have a steady and fairly low-cost base.

Suggested Read: Gold Investment Options in India: Which One is Best for You?

How Does Gold Bees Work?

The buying of Gold Bees works like purchasing a stock. Here’s how to buy Gold Bees:

• Fund Creation: The ETF is supported by the physical gold bullion that is purchased by the asset management company, typically gold of 99.5% purity.
• Trading on Exchanges: The Gold Bees units, like shares, are listed and traded on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). To either sell or buy, investors require a demat and trading account.
• No Lock-In: There is no lock-in time; you can either sell or purchase in the market hours at the current price.
• Fractional Ownership: The units of Gold Bees represent specific quantities of gold, usually 1 gram each, making gold investment accessible even with a smaller investment budget.

Gold BEES has liquidity and transparency since it is exchange-traded and avoids issues of storing and security of physical gold, much like a mutual fund investment structure.

Net Asset Value (NAV) of Gold Bees

NAV (Net Asset Value) refers to the Gold Bees price per unit at the end of every day of the trading period. It is calculated by the mutual fund house and is computed according to SEBI’s guidelines and regulations.

The formula for calculating NAV for Gold Bees is:

Market value of physical gold held by the scheme + other current assets - current liabilities and provisions, including accrued expenses)/Total number of Gold Bees units outstanding on the valuation date.

Suggested Read: Digital Gold vs. Gold ETFs: What's the Best Investment Option for You?

Returns from Gold Bees

Gold Bees does not pay a fixed rate of return, such as a bond or a fixed deposit; instead, its returns depend on the gold rate today. Here's what that means:

• Should the price of gold increase during some time (1, 3, or 5 years), your investment in Gold Bees will increase accordingly (as long as there are no fund expenses).
• On the other hand, your value of investment may decline on the occasion of a drop in gold prices.

Over the years, long-term analysis reveals that GOLD Bees investments have produced a significant increase in accordance with the fluctuations in gold prices. The alignment between Gold Bees and the gold rate proves the effectiveness of gold as a hedge against inflation and market uncertainty.

Gold Bees combines the traditional appeal of gold with the ease and dynamism of stock market investing. It offers a low-cost, liquid alternative to traditional gold purchases, as it is backed by physical gold and traded like a security.

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