MOSt Gold Shares NFO

2nd March 2012

Motilal Oswal MOSt Shares (MOSt Gold Shares) is a gold exchange traded fund. Like other GETFs this fund will buy physical gold on behalf of investors for units held in the demat form. Its NFO is open from 2 March 2012 to 16 March 2012.

Investors can subscribe for a minimum of 10 units which corresponds to 10 grams of gold. MOSt Gold Shares look like an attractive option since units can be redeemed for physical gold for as low as 10 units. Here units will be truly redeemable for retail investors, unlike in other GETFs where at least 1 kg worth of gold must be redeemed. This is because they buy physical gold bars of 1 kg. MOSt Gold Shares also promises to offer imported gold during redemption.

Another aspect to look out for in ETFs is the expense ratio. Proposed expense ratio of MOSt Gold Shares is 1.30% which is lower than all but 2 other ETFs of the 11 GETFs in India. Since all GETFs track the price of spot gold, their performance should be similar. Differences can be accounted to 1) tracking error and 2) different expense ratios. Tracking error in MOSt Gold Shares is expected to be lower as the portfolio has 95% exposure to gold bullion, higher than many other GETFs.

Fintotal recommends MOSt Gold Shares NFO. Investors who wish to subscribe can download application form from http://www.mostshares.com/MOSt-Gold-Shares.aspx. Since units will be held in dematerialized form, demat account is required. The units will be listed on NSE and BSE within 5 days of allotment. Units can be traded in multiples of 1 unit on the exchanges.

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