What is Gold BeES ETF and How to Invest in It?

Gold has always been one of the most trusted investment options in India. From traditional jewelry to modern financial products, Indians have a special place for gold in their portfolios. But buying physical gold comes with issues like storage, safety, and making charges. That’s why financial markets introduced a modern solution – Gold ETFs (Exchange Traded Funds). “Gold BeES ETF is one of the most trusted ways to invest in gold in India. Unlike physical gold, Gold BeES ETF gives you exposure to gold prices through the stock exchange.”

Among them, the most popular is Gold BeES ETF, India’s first Gold ETF, launched in 2007 by Benchmark Mutual Fund (now Nippon India Mutual Fund).

What is Gold BeES ETF?

Gold BeES (Gold Benchmark Exchange Traded Scheme) is India’s first Gold Exchange Traded Fund (ETF), launched in 2007 by Benchmark Mutual Fund (now managed by Nippon India Mutual Fund).

It is a digital investment in gold, which means:

• Instead of buying physical gold (jewelry, coins, bars), you buy units of Gold BeES through the stock exchange.
• Each unit represents a small quantity of gold (close to 1 gram).
• These units are backed by actual physical gold stored in vaults, so your investment reflects real gold prices.
• The units are traded on NSE & BSE just like shares, under the ticker symbol GOLDBEES.

How Gold BeES Really Works?

Gold BeES ETFs are designed to mirror the actual price movement of physical gold in the market. Let’s break it down step by step:

1. Creation of Gold BeES ETF

• To launch Gold BeES, the fund manager (AMC) buys physical gold (bullion – gold bars and coins of 99.5% purity).
• This physical gold is securely stored in bank-approved vaults.
• The total physical gold held by the fund becomes the backing asset of the ETF.

2. Units of Gold BeES

• The fund then issues units of Gold BeES that represent small portions of the total gold held.
• Typically, 1 unit = 0.01 gram of gold (or close to it, depending on market rules).
• These units are listed and traded on NSE & BSE, just like shares.

3. Price Movement

• The price of Gold BeES units moves in sync with gold prices in the domestic market.
• If gold price rises, unit price rises. If gold price falls, unit price falls.
• The market price of 1 unit ≈ price of 0.01 gram of gold minus fund management & trading costs.

4. Trading on Exchanges

• Investors can buy or sell Gold BeES units on stock exchanges during market hours.
• Transactions happen through your Demat + Trading account, similar to equity shares.
• After purchase, units are credited to your Demat account.

5. Returns & Risks

• Your return depends on gold price movement in the market.
• Since it’s backed by actual physical gold, there is high transparency and very little tracking error.
• However, like gold, Gold BeES value can fluctuate based on international gold prices, demand-supply, inflation, and currency movement.

List of Other Investments Similar to Gold BeES

Gold ETFs such as Gold BeES are gaining rapid popularity among investors, especially during uncertain and volatile times. They offer the benefit of investing in gold without the need to hold it physically.

Apart from Gold BeES, here are some other popular Gold ETFs available in India:

1. SBI ETF Gold – Managed by SBI Mutual Fund, one of the largest and most trusted AMCs in India.
2. HDFC Gold ETF – Backed by HDFC Mutual Fund, offering safe exposure to gold prices.
3. Kotak Gold ETF – Known for its efficient tracking of domestic gold prices.
4. Axis Gold ETF – Provides liquidity and convenient gold investment through Demat form.
5. ICICI Prudential Gold ETF – Managed by ICICI AMC, one of the leading players in the ETF segment.
6. UTI Gold ETF – A trusted option by UTI AMC with competitive expense ratio.

Gold BeES ETF vs Other Gold Investment Options

Investment Option	Liquidity	Safety	Cost	Taxation	Returns
Gold Jewelry	Low	Risk of theft	Making charges 5–20%	LTCG after 3 yrs	Linked to gold price
Gold Coins/Bars	Medium	Needs storage	No making charges	LTCG after 3 yrs	Linked to gold price
Gold ETF (Gold BeES)	High	Very safe	Low expense ratio	LTCG after 3 yrs	Linked to gold price
Gold Mutual Fund	High	Safe	Slightly higher expense ratio	LTCG after 3 yrs	Linked to gold price
Sovereign Gold Bonds (SGBs)	Locked 5–8 yrs	Govt-backed	No expense	LTCG after 8 yrs exempt	Gold price + 2.5% interest

How are Gold BeES Taxed?

Gold BeES does not have any special tax exemptions. The tax depends on how long you hold the units before selling:

1. Short-Term Capital Gains (STCG):

• If you sell before 36 months (3 years) of holding.
• Gains are added to your total income and taxed as per your income tax slab (5%, 20%, or 30%).

👉 Example: If you are in the 30% slab and make ₹10,000 profit in Gold BeES before 3 years → Tax = ₹3,000.

2. Long-Term Capital Gains (LTCG):

• If you sell after 36 months (3 years) of holding.
• Gains are taxed at 20% with indexation benefit.
• Indexation adjusts your purchase price for inflation, reducing taxable gains.

👉 Example:

• Bought Gold BeES in 2020 for ₹50,000.
• Sold in 2025 for ₹80,000.
• With indexation, adjusted purchase cost may become ~₹60,000.
• Taxable gain = ₹20,000 (₹80,000 – ₹60,000).
• Tax = 20% of ₹20,000 = ₹4,000 (instead of 20% on full ₹30,000).

Benefits of Investing in Gold BeES

Investing in Gold BeES ETF gives you all the advantages of owning gold, but in a modern, cost-effective, and secure way. Here are the major benefits:

1. Safe & Secure Investment

• Backed by 99.5% purity physical gold stored in bank vaults.
• No risks like theft, storage problems, or purity concerns compared to jewelry or coins.

2. High Liquidity

• Listed on NSE & BSE under ticker GOLDBEES.
• You can buy or sell units anytime during stock market hours just like shares.
• Much easier than selling physical gold.

3. Low Cost, No Making Charges

• Unlike jewelry, there are no making or wastage charges.
• Only a small expense ratio (~0.5–1%) is charged by the AMC.

4. Portfolio Diversification

• Gold usually moves opposite to equity markets.
• Adding Gold BeES to your portfolio reduces overall risk and provides stability.

5. Tax Benefits on Long-Term Holding

• If held for 3+ years, gains are taxed at 20% with indexation benefit.
• Indexation helps lower taxable gains by adjusting cost for inflation.

Benefits and Drawbacks of Investing in Gold BeES

✅ Top 5 Benefits	⚠️ Top 5 Drawbacks
Safe & Secure Investment – Backed by 99.5% purity gold stored in bank vaults.	No Physical Delivery for Small Investors – Units can only be sold for cash, not redeemed for physical gold (except in large lots).
High Liquidity – Easily tradable on NSE & BSE like shares.	Tracking Error – Returns may slightly differ from actual gold prices due to expenses and fees.
Low Cost, No Making Charges – Unlike jewelry, no 5–20% making charges; only a small expense ratio.	Taxation Less Favorable – Treated like debt funds (20% LTCG after 3 years with indexation), not equity.
Small Ticket Size – Investment starts with just 1 unit (~1 gram of gold).	Liquidity Risk on Low-Volume Days – Wide bid-ask spreads may affect selling price.
Portfolio Diversification – Acts as a hedge against inflation and stock market volatility.	Gold Price Fluctuations – Value can be volatile due to global gold price movements.

Conclusion

Gold BeES is one of the easiest ways to invest in gold today. You don’t need to buy physical gold, worry about purity, or think about storage — everything is taken care of by the fund. With just a few clicks, you can own gold in your Demat account, just like buying a stock.

It’s affordable, safe, and a smart way to diversify your investments. But remember, gold prices can go up and down, and taxes on Gold BeES are not as friendly as equity investments. Still, if your goal is to protect your money during uncertain times or slowly build wealth, Gold BeES is a solid option to keep in your portfolio.