Exchange-Traded Fund (ETF)

General Information

The differences between ETF and mutual funds:

	Stock Mutual Fund	ETF
Trading	Investment Manager and Mutual Fund sales agent	Dealer Partisipant in Primary Market Exchange Member in Secondary Market
Minimum Purchase	1 unit	Primary Market: Creation unit ( = 1000 lot = 100.000 units) Secondary Market: 1 Lot (100 units)
Transaction fee	Buy and Sell fees (usually 1% until 3%)	Broker fee (same like stocks) in Stock Exchange
Price	The end of the day	Real time
Underlying	Stock	Reference index
Settlement	T+7 Settlement	T+2 Settlement
Dealer Participant	No	Yes

Dealer Participant is Exchange's member who cooperate with ETF Investment Manager to sell and buy ETF shares. In Indonesia, there is 9 (nine) Dealer Participant, that is:

No	Code	Exchange Members' Name
1	PD	Indo Premier Sekuritas
2	DH	Sinarmas Sekuritas
3	CC	Mandiri Sekuritas
4	DX	Bahana Sekuritas
5	KK	Phillip Sekuritas Indonesia
6	YP	Mirae Asset Sekuritas Indonesia
7	GR	Panin Sekuritas Tbk
8	BQ	Korea Investment and Sekuritas Indonesia
9	SQ	BCA Sekuritas

 

The Benefits of ETF

The benefits of ETF compare to another alternative investment are:

The Purpose of ETF

The purpose of trading ETF are:

1. Diversification: Automatic Diversification of some superior stock in one order.
   
   
2. Flexibility: Memanfaatkan fleksibilitas jual/beli yang tinggi, karena dapat langsung melakukan pembelian maupun penjualan ETF selama jam bursa berlangsung selayaknya saham.

ETF's Trading Mechanism

ETF’s Regulation

The surveillance of ETF is held by three parties, that is OJK, BEI and KSEI. ETF’s trading in Indonesia is regulated by :

Indicative Net Asset Value (iNAV)

Indicative Net Asset Value (iNAV) is a measurement of intraday NAV of an ETF and reflects the current market value of all assets in an ETF’s portfolio basket. The iNAV is published on IDX website during the exchange trading hours, and can be used as a simple reference of the fair value of an ETF at that time. The availability of iNAV information on IDX website can further highlight the transparency aspect of an ETF, in addition to the publication of ETF Portfolio Composition File (PCF) which can also be accessed by investors on IDX Website.

The iNAV displayed on IDX Website is calculated based on the information on the Portfolio Composition File (PCF) submitted by ETF issuer to IDX, and the current price of the underlying shares of an ETF, without taking into account regarding the liability aspects of an ETF (fees and costs). The calculation methodology of the iNAV is as follows:

Currently, IDX only calculate the iNAV of equity-based ETF.

New! Gold ETFs

Gold ETF is a mutual fund structured as a Collective Investment Contract, with gold as its underlying asset and units traded on the stock exchange. By investing in a Gold ETF, investors can gain exposure to gold price movements without having to store physical gold themselves.

Gold ETFs in Indonesia are developed based on the following core criteria:

Criteria	Details
Investment Policy	At least 95% of assets are allocated to gold, with no more than 5% allocated to money market instruments, deposits, and/or cash and cash equivalents.
Gold Standards	Pure gold meeting either of the following purity standards: 99.9% (SNI 8080:2020 certified – local standard); or 99.5% (LBMA certified – international standard).
Gold Provider	A bullion business licensed by the Financial Services Authority (OJK) to trade gold, or another party approved by OJK.
Gold Custodian	A party appointed by the Central Securities Depository (KSEI) or the Custodian Bank. Currently, the appointed entities are bullion businesses licensed by OJK to provide gold custody services.

Gold in Investment Portfolio

Historically, gold has exhibited investment performance characteristics that differ from those of other asset classes, such as equities and bonds. These differences can help diversify a portfolio. During bearish markets, inflation, interest rate uncertainty, or geopolitical tensions, gold can help balance an investment portfolio. It may be used as a hedging asset that complements investment diversification..

Diversification	Store of Value	Resilience During Uncertainty
Gold prices do not always move in the same direction as other asset classes. This can help create a portfolio with more varied sources of risk and potential returns.	Gold has been used as a long-term store of value and is traded globally.	Historically, gold has shown defensive characteristics during some periods of market stress and economic uncertainty. This pattern does not occur in every market condition.

Important to Understand: Gold prices can rise or fall. Past performance does not guarantee future results, and gold is not guaranteed to provide an effective hedge.

Benefits of Investing in Gold through Gold ETFs

1. Easy to Trade
   Gold ETFs can be bought and sold through a securities company’s online trading application connected to the exchange during exchange trading hours, just like shares.
2. Affordable
   Gold ETFs can be bought and sold on the exchange starting from 1 lot, equivalent to 100 ETF units.
3. Professionally Managed
   Gold ETF portfolios are managed by an Investment Manager and administered by a Custodian Bank in accordance with capital market regulations.
4. Backed by Physical Gold
   Gold ETF assets are invested in physical gold that meets the required purity standards and is stored by reputable institutions in high-security vaults.
5. Transparent
   The Investment Manager publishes the Gold ETF’s portfolio composition, or Portfolio Composition File (PCF), daily on the exchange’s website.
6. Supported by Participating Dealers
   Participating Dealers support the creation and redemption of ETF units and help provide liquidity for ETF trading on the exchange.
   
   

Illustration of Gold ETF Unit Creation

PD: Participating Dealer; EGR: Electronic Gold Receipt
*Gold providers and gold custodians are bullion businesses, currently operated by Pegadaian.

Gold ETF Portfolio Composition File

The Portfolio Composition File (PCF) provides information on the holdings of a Gold ETF. It is published daily by the Investment Manager through the Indonesia Stock Exchange (IDX) website. Investors can use this information to identify:

1. The number of ETF units outstanding.
2. The number of ETF units in one Creation Unit, or basket. For example, 1 Creation Unit = 100,000 ETF units.
3. The amount of gold, in milligrams, in one Creation Unit (basket), represented by an Electronic Gold Receipt (EGR) as evidence of ownership of physical gold.
4. The cash component in one Creation Unit (basket).

Investors can access Gold ETF Portfolio Composition Files on the following IDX webpage:

Using the Gold ETF PCF and the daily fair value reference price for its underlying gold published by the gold provider, investors can calculate the Gold ETF’s indicative Net Asset Value (NAV). This can serve as a fair value reference for Gold ETF units traded on the exchange.

How to Trade Gold ETFs

Investors can trade Gold ETFs in two ways:

1. Buy or sell Gold ETFs through a Participating Dealer in large transaction sizes, with a minimum of 1 basket or 1 Creation Unit 
   For large Gold ETF buy or sell orders, investors can transact directly with the Gold ETF’s Participating Dealer. The Participating Dealer facilitates the creation or redemption of Gold ETF units in Creation Units (baskets), including buying or selling the underlying gold to fulfil the investor’s order.
   
2. Buy or sell Gold ETFs on the exchange in smaller transaction sizes, with a minimum of 1 lot = 100 ETF units)
   The process is as straightforward as trading shares. Open your investment application, select a Gold ETF listed on the exchange, and enter a buy or sell order at your desired price and quantity. Once the order is matched with a counterparty, the transfer of Gold ETF units is immediately reflected in your investment portfolio.
   

What to Know Before Trading Gold ETFs

1. Gold ETF Unit
   Gold ETFs are backed by physical gold, but they are traded in units rather than by weight, as with gold bars. For exchange transactions, 1 ETF lot = 100 units.
2. The Amount of Gold Represented by One Gold ETF Unit
   Each Gold ETF listed on the exchange may represent a different amount of gold per unit, depending on the product specifications set by its Investment Manager. Investors can refer to the Gold ETF’s PCF on the exchange’s website to determine the gold equivalent of each product. Dividing the amount of gold in milligrams per basket by the number of ETF units per basket gives the amount of gold represented by one Gold ETF unit.
3. Gold ETF Market Prices May Differ from the Value of the Underlying Gold
   The price of the underlying gold is the main factor influencing a Gold ETF’s Net Asset Value (NAV), which represents its fundamental value. However, when Gold ETF units are traded on the exchange, their prices are also affected by investor demand and supply. As a result, units may trade above NAV (at a premium) or below NAV (at a discount).
4. Gold ETF Returns May Differ from Gold Returns
   A Gold ETF aims to provide exposure to the price movements of its underlying gold. However, its performance may not precisely mirror gold price movements. Differences may arise from portfolio composition, management fees, the cash component, and ETF trading conditions.
   
   

Sharia Aspects of Gold ETFs

Gold ETFs may be developed in accordance with Sharia principles by referring to Fatwa No. 163/DSN-MUI/VIII/2025 on Sharia Gold Exchange Traded Funds, issued by the National Sharia Board of the Indonesian Ulema Council (DSN-MUI). They can offer Sharia investors an additional Sharia investment option in the Indonesian capital market. The Sharia Gold ETF Fatwa is available at the following link:

 

Risks of Investing in Gold ETFs
All investments carry risks. Gold ETFs do not guarantee investment value or returns. Investors should therefore understand the following risks before deciding to invest:

1. Market Risk
   Gold ETF prices may fluctuate with gold prices and domestic or global economic and market conditions.
2. Liquidity Risk
   Although Participating Dealers help provide liquidity in the secondary market, under certain conditions, Gold ETF bid-ask spreads may widen and trades may become harder to execute.
3. Tracking Error Risk
   A Gold ETF’s performance may differ from the price movements of its reference gold asset.
   
   

Prospectus of Gold ETFs
Various Gold ETFs are traded on the exchange, and each product may have different characteristics. For more information on each product, including its structure, investment policy, ETF management fees, underlying gold purity standards, reference prices, trading mechanisms, and risk factors, investors should refer to its prospectus:

No.	ETF Code	ETF Name	Prospectus
1	XDES	Reksa Dana Syariah BRI MI Gold ETF Syariah
2	XMES	Reksa Dana Syariah Mandiri ETF Emas
3	XSGO	Reksa Dana Syariah Syailendra ETF Sharia Gold
4	XGLD	Reksa Dana Syariah Premier ETF Gold Sharia Indonesia
5	XTRA	Reksa Dana Syariah Trimegah Syariah ETF Emas
6	XBGS	Reksa Dana Syariah Batavia Gold Sharia ETF
7	XKGS	Reksa Dana Syariah KIM Gold ETF Sharia

 

Tips for Investing in Gold ETFs

1. Define Your Investment Objectives
   Before investing in Gold ETFs, identify your investment objectives and the role of gold in your portfolio, such as diversification, a store of value, or part of an asset allocation strategy.
2. Understand the Product
   Study the Gold ETF’s underlying asset, investment policy, portfolio structure, fees, and risks.
3. Check Liquidity
   Assess whether the ETF has adequate liquidity. Look at its daily trading volume, the width of its bid-ask spread, and the availability of market quotes.
4. Compare Performance Regularly
   Regularly evaluate and compare the Gold ETF’s performance with the price movements of its reference gold asset.

Disclaimer
This information is provided for educational purposes only and does not constitute a recommendation or solicitation to buy or sell any investment product. Investing in Gold ETFs involves market value risk. Please carefully review the relevant information and consider your risk profile before making any investment decision.