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Volume 1, Issue 2

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Volume 1, Issue 2

Analysis of Individual Investor’s Preference and Portfolio Risk-Return for Gold as an Asset Class


Charmi Shah


IFIM Business School, Bangalore, India


As per tradition, In India, gold was seen only as a symbol of security and a sign of prosperity. In the traditional Indian culture, gold was an integral part of daily life where purchases of gold jewellary were only considered as a form of a liquid asset.

Since last few years, the Indian retail investment market was one of the strongest in the world. Demand increased substantially by 264% to 93 tonnes in this period and accounted for 25% of total domestic gold demand.

India’s gold ETF market has also enjoyed further growth in recent quarters. Total holding amounted to 11 tonnes by the end of August 2013, up 77% from the same period last year. There are basically three ways to invest in gold, first the most popular way is to buy physical gold, second to do trading in gold futures contracts, third to invest into Gold ETF mutual funds.

In this paper, researcher has tried to compare all the forms of gold investment with each other and also tried to construct portfolio that will consist of all the forms of gold avenues and analyzed portfolio risk and return.

Researchers have also carried out primary survey to know investor’s preference for Gold as an investment avenue and the form in which they would like to invest in gold.

The findings reveal detailed analysis of all the forms of gold investment along with pros and cons, risk-return perspective of holding gold in the portfolio, and feasibility of gold as a hedging tool.


Gold ETF, Gold Futures, Risk-Return Analysis, Perception.

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