It is a well-known fact that Indians are one of the world’s largest consumers of gold. Gold is regarded as a solid investment.
However, with the passage of time, people have adopted a more modern outlook to investing in gold. Gold is a safe investment choice and investors can invest in either a gold mutual fund or a gold exchange traded fund.
Investment in Gold ETFs
Physical gold investment is one of the option for gold investments. A gold ETF is a kind of exchange traded fund used as an option to replace physical gold. Gold ETFs are funds that invest in physical gold and gold related instruments and depend on gold prices. Gold ETFs invest in gold bullion, which is the same as holding the gold. They are ideal for investors looking to use gold as an investment option rather than for personal use. As compared to physical gold investments, ETFs have lower expenses on account of their unique structure and creation process.
Gold ETFs in India ensures that your portfolio is well-balanced; as gold prices fall or rise, you can modify your asset allocation plan based on the gold ETF’s performance to minimise the risk and potential gains. Investment in Gold Funds
Gold mutual funds are basically fund of funds scheme that invest in gold exchange-traded funds. Their underlying scheme invest in gold bullion and rely on investments directly linked to gold prices. Gold mutual fund performance is based on the returns of Gold ETFs in which it invests.
Gold MFs vs. Gold ETFs
Minimum Amount: One can invest a minimum of INR 500 as a monthly SIP while investing in Gold Funds whereas generally one needs to invest a minimum of 1-gram gold in a Gold ETF depending on respective Scheme features.