Gold investment funds don’t need Demat accounts as they invest in AMC’s gold ETFs. It allows SIP investments, but gold ETFs don’t. Gold funds have an exit load if they are redeemed within a year, while gold ETFs do not. A Demat account is required to buy and sell gold ETFs.
Compared to gold ETFs, gold investment funds offer a slightly higher risk because they invest in gold stocks, which tend to be price-sensitive. You can invest in this precious metal in a variety of ways, including investing in physical gold, gold ETFs, gold investment funds, and government gold bonds. On the other hand, while gold ETFs and gold investment funds are very similar, they have a few differences. Hopefully, by understanding the different characteristics between gold mutual funds and gold ETFs, you can identify which best suits your investment strategy and financial goals.
You can either invest in gold investment funds, which are professionally managed, or in gold ETFs, which can be easily traded on the market, similar to stocks. As with gold mutual funds, investing in gold through a gold ETF can be a convenient and accessible way to gain exposure to the safe haven investment. Similar to gold investment funds, the market value of gold ETFs can approach that of the spot price of gold. A gold investment fund is an investment fund that indirectly invests in gold by investing in gold ETFs as an underlying asset.
In contrast to gold investment funds, the underlying asset of gold ETFs consists either of shares of gold mining companies or of physical gold itself. But experts say investing in gold ETFs and gold mutual funds is a better way to invest in gold. Chintan Haria, Head of Product Development %26 Strategy at ICICI Prudential Mutual Funds, talks about how gold ETFs differ from gold investment funds. While gold ETFs are financial instruments that track the price of gold, gold investment funds are basically a fund within a fund that can include ETFs, gold mining stocks, and other gold-related assets.
A Demat account is mandatory for investments in gold ETFs, while you can invest in gold investment funds even without a Demat account. So what should you buy this time? Physical gold, gold government bonds (SGB), gold ETFs (Gold Exchange Traded Funds), digital gold or gold investment funds? Digital gold has become popular and offers investment options such as government bonds, gold ETFs, and gold investment funds. The gold investment fund, on the other hand, operates according to a fund structure that primarily invests in gold ETFs as an underlying asset.