Baroda BNP Launches NFO for Gold Exposure via ETF: Opens on 4 August

Baroda BNP Paribas Gold ETF Fund of Fund is an open‑ended Fund of Fund scheme launched by Baroda BNP Paribas Mutual Fund, providing a simple and efficient way for investors to gain exposure to gold. The fund invests predominantly in Baroda BNP Paribas Gold ETF, which in turn holds physical gold. It is designed to deliver returns that broadly track the domestic gold price according to the LBMA AM fixing. With a low minimum investment of ₹1,000 and SIP options starting at ₹250, the scheme aims to cater to retail investors who want liquidity, low volatility and long‑term appreciation.

There is a 1 % exit load if redeemed within 15 days, and no exit load thereafter, ensuring flexibility. The fund is managed by an experienced team including Gurvinder Singh Wasan, Madhav Vyas and Swapna Shelar. Its objective is to offer convenient gold exposure via mutual fund units, avoiding the complications of physical gold purchase and storage.

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Key Features of Baroda BNP Paribas Gold ETF Fund of Fund

• Opening Date: August 4 2025
• Closing Date: August 14, 2025
• Exit Load: 1 % if redeemed or switched within 15 days; nil thereafter
• Minimum Investment: ₹1,000 in lump sum; SIP from ₹250 per month

Objective of Baroda BNP Paribas Gold ETF Fund of Fund

The objective of Baroda BNP Paribas Gold ETF Fund of Fund - Dir (G) is to generate returns in line with those of Baroda BNP Paribas Gold ETF, which reflects domestic gold prices. It seeks to provide investors with an accessible, cost‑effective route to invest in gold without holding physical metal. The scheme intends to deliver liquidity, low volatility, and long‑term capital growth through gold exposure, subject to tracking performance of the underlying ETF.

Investment Strategy of Baroda BNP Paribas Gold ETF Fund of Fund

• Primarily invests 95 % to 100 % of its assets in Baroda BNP Paribas Gold ETF, which holds physical gold.
• Allocates 0 % to 5 % to money‑market instruments like treasury bills and government securities with residual maturity up to one year.
• Does not invest in derivatives, securitised debt, structured obligations, stock lending, or engage in short selling.
• NAV reflects the closing price of the underlying Gold ETF, with daily valuation and transparent pricing.

Risks Associated with Baroda BNP Paribas Gold ETF Fund of Fund

• Exposure to gold price volatility may cause significant short‑term fluctuations in returns.
• Tracking error risk exists since returns depend on the efficiency of the fund‑of‑fund structure.
• Benchmark’s high‑risk rating means investor capital may experience marked swings in value.
• No guaranteed returns; investor may not achieve the desired performance despite the fund matching the benchmark.
• Exit load applies if redeemed within 15 days, reducing short‑term liquidity and net gains.
• The scheme excludes diversified asset classes, increasing susceptibility to movements only in gold prices.

Risk Mitigation Strategy by Baroda BNP Paribas Gold ETF Fund of Fund

Baroda BNP Paribas Gold ETF Fund of Fund addresses risks by investing almost entirely in a well‑regulated ETF backed by physical gold, thereby minimising counterparty risk and ensuring gold price transparency. The strict asset allocation—in which at most 5 % is held in secure money‑market instruments—helps manage liquidity and reduces volatility. Exit load policy discourages short‑term speculation, while daily NAV calculation and adherence to benchmark pricing provide clarity. Further, the fund is managed by seasoned professionals who follow disciplined compliance norms as mandated by SEBI. These mechanisms jointly reduce tracking error and enhance investor protection over the long term.

What Type of Investor Should Invest in Baroda BNP Paribas Gold ETF Fund of Fund?

• Investors looking for simple, low‑cost gold exposure without physical handling hassles.
• Those with a moderate to high risk tolerance are aiming for long‑term capital appreciation via gold.
• Retail investors seeking liquidity and flexibility, including both lump‑sum and SIP routes.
• Individuals are aiming to diversify portfolios as a hedge against equity volatility and inflation risk.

Where Will the Baroda BNP Paribas Gold ETF Fund of Fund Invest?

• The scheme invests 95 %–100 % of its net assets in the Baroda BNP Paribas Gold ETF, which directly holds physical gold.
• It may allocate up to 5 % in treasury bills or government securities with a maturity of under one year to manage liquidity.
• No exposure to derivatives, structured products, or equity instruments is permitted.
• It avoids stock‑lending, short sales and securitised debt, aligning with its gold‑only strategy.