GLD is an exchange traded fund (ETF) which tracks a foreign gold fund. GLD is listed on the SET.
Since GLD is listed on the stock market, investors with a brokerage account could transact fund units straight away. Trading procedures and fees are similar to stocks. Investors can place bids and offers through brokers for the desired board lot.
Gold Bars |
“GLD” | Other Gold Funds | |
| Price Quotations / Traded Prices | Regularly displayed in front of gold shops (price known beforehand) |
Real Time throughout the day on display boards (price known beforehand) | Once a day using closing NAV of trading day (price not known beforehand) |
| Trading Hours | Gold shops’ business hours | The stock market’s trading hours | There is a cutoff time for placing trade orders as indicated by the asset management firm. |
| Holidays | Gold shops' holidays | Stock Exchange of Thailand's holidays | The funds’ holidays (Thailand and international holidays) as indicated on the prospectus |
| Returns | Gold Spot price+ currency exchange rate | Gold Spot price + currency exchange rate | Gold Spot price + currency exchange rate (subjected to the fund’s fx risk management policy) |
| Volatility / Risks |
Gold Spot price; Currency exchange rate |
Gold Spot price; Currency exchange rate |
Gold Spot price; Currency exchange rate (subjected to the fund’s fx risk management policy) |
|
Expenses
|
Difference between bid-offer price, minimum of 100 baht per one baht weight gold (about 0.47% of the transaction value) | A commission fee not exceeding 0.2578% of the transaction value. Annual fee not exceeding 0.46% per annum of the fund’s total asset value (excluding value-added tax and the fund’s expenses incurred abroad) | Trading fees apply as described in fund prospectus (excluding fund’s expenses incurred abroad) |
| Gold Bullion Storage | Gold bullions: home/ bank safe deposit rental box; Gold voucher: gold shop | The secure vault at HSBC in the UK | As indicated in the fund prospectus |
| Gold Quality | Minimum purity of 96.50% | Minimum purity of 99.50% | Minimum purity of 99.50% |
| Minimum Trade Value | 5 baht weight (or about 100,000 Baht) |
Minimum of 100 units (about 200 Baht) |
2,000 Baht for KT-Gold Fund by KTAM or as indicated in the prospectus |
Refer to the iNAV (Indicative NAV) on www.ktam.co.th or www.settrade.com
Generally, for open-end funds, the fair trading price is NAV per unit, announced once at the close of the fund’s trading day. However since GLD can be traded throughout the trading day, iNAV or indicative NAV was introduced as a tool to help investors make decisions (think of it as an estimated NAV price that is updated constantly throughout the day).
iNAV is calculated from
*Note: iNAV price is based on THB/HKD exchange rate and the master fund’s trading price on the Hong Kong Stock Exchange from 8:30-11:00 and 12:30-15:00 (Thailand time zone). The price of the master fund is unchanged outside these periods or on Hong Kong Stock Exchange holidays.
- NAV price from the end of the previous trading day
- Price changes of the SPDR GOLD Trust (master fund) during the day
- Changes in exchange rates between THB/HKD
*Note: iNAV price is based on THB/HKD exchange rate and the master fund’s trading price on the Hong Kong Stock Exchange from 8:30-11:00 and 12:30-15:00 (Thailand time zone). The price of the master fund is unchanged outside these periods or on Hong Kong Stock Exchange holidays.
The asset management company updates the iNAV price every 15 seconds.
Due to aforementioned factors, at certain times, price movements may differ from iNAV movements. Investors who bought when prices are higher than iNAV (premium) will see a smaller return than the uptick in the master fund (also factor in exchange rates) when a redemption is made while market premiums have subsided.
On the contrary, if investors bought when the price is lower than iNAV (discount), they will receive a higher return than the uptick in the master fund (also factor in exchange rates) if the transaction took place while the market discount is decreasing.
On the contrary, if investors bought when the price is lower than iNAV (discount), they will receive a higher return than the uptick in the master fund (also factor in exchange rates) if the transaction took place while the market discount is decreasing.
The trading price is determined by market demand, as shaped by investors’ perception of the future of gold prices. But when market prices differ from iNAV, which is essentially an estimated NAV reflecting price changes of assets held in the portfolio namely ETF SPDR® Gold Trust and the exchange rate changes during the day, arbitragers will try to purchase directly from the asset management company, participating dealers (at the price equal to the fund’s investment in SPDR® Gold Trust in Hong Kong Stock Exchange on that day) and turn around to sell the unit trusts at the higher market price. Eventually, this narrows any discrepancies between the market traded price and iNAV.
iGLD price is calculated by the asset management company as an alternative to iNAV only on Hong Kong Stock Exchange holidays. Since GLD is based on the SPDR Gold Trust which subsequently determines iNAV, investors should use iNAV as the primary reference whenever the Hong Kong Stock Exchange is open for business.
The asset management company updates the iGLD price every 15 seconds.
Since the price of the master fund is not updated outside operating hours between 8.30-11.00 and 12.30-15.00 (Thailand time zone) or on Hong Kong Stock Exchange holidays, the iNAV would only reflect THB/HKD exchange rate movements. As such, investors may use iGLD, comprising gold spot prices and the USD/THB exchange rate, as a reference to trade during those periods.
iGLD is determined from
1. The GLD fund’s NAV at the previous day’s close
2. Intra day movement in the gold spot price
3. THB/USD exchange rate movement
For example, assume the NAV of the GLD fund was 10 Baht at the end of Day 1. The iGLD price on Day 2 would be 10 Baht + (percentage change in gold spot prices) + (percentage change in the exchange rate)
1. The GLD fund’s NAV at the previous day’s close
2. Intra day movement in the gold spot price
3. THB/USD exchange rate movement
For example, assume the NAV of the GLD fund was 10 Baht at the end of Day 1. The iGLD price on Day 2 would be 10 Baht + (percentage change in gold spot prices) + (percentage change in the exchange rate)