Zerodha Gold ETF FoF: Top 5 key details to note about the new scheme

Zerodha Fund House has unveiled its latest offering, the Zerodha Gold ETF FoF (Fund of Funds). It is an open-ended scheme that would invest in units of Gold ETF. It will open for subscription on October 25, 2024, with a closing date of November 8, 2024.

A Fund of Funds (FOF) is a type of mutual fund that predominantly invests in other mutual funds or similar investment vehicles, rather than directly in individual securities such as stocks or bonds. The primary goal of a Fund of Funds is to offer investors diversification across multiple mutual funds or asset classes. Below are some top-performing FOFs available for investment.

A Gold FOF is a type of passive fund that invests in Gold Exchange Traded Fund (ETF). It possesses various characteristics similar to traditional mutual funds, including options for SIP, lump sum investments, small initial contributions, and the ability to withdraw funds at any time. However, the key distinction lies in its underlying asset being gold ETFs, which in turn invest in physical gold.

Key details

1. Zerodha Gold ETF FoF is a scheme with a passive investment strategy which will invest in units of underlying Gold ETF. 
2. The investment objective of the scheme is to seek capital appreciation by investing in units of Gold ETF, which is in turn linked to the performance of physical gold in the domestic market. 
3. The Zerodha Gold ETF FoF will invest 95%-100% in units of underlying Gold ETF while 0%-5% fund allocation will be in debt securities and money market instruments.
4. The minimum amount for application is Rs 500 and in multiples of Rs 1 thereafter. The starting Net Asset Value (NAV) of this fund will be around Rs 10.
5. The investors should note that the scheme is listed as highly risky, which means the principal amount will be at high risk, and the riskometer of the benchmark will be high.