Want to know Best Gold Mutual Fund? Well you have landed on the right article
Mutual Funds can be referred to as a portfolio of shares that pool through various investors. An Exchange Traded Fund (ETF) or Gold Fund is a mutual fund that invests predominantly in gold-producing companies.
If the Fund invests in stocks or bullion and bonds of gold miners and manufacturers, the price of the shares of those funds will correspond to the price of gold.
The main motive of the mutual funds is to receive a good return on gold investments in a conducive way.
Perhaps, Indians are very prone to buying gold for their wealth creation or ornamental purposes. As India is a country of festivals, it is very general for investors to buy gold all year round.
While most families choose to buy physical gold, the Gold mutual funds are also a convenient option today.
It provides you multiple benefits such as no Demat account required, minimum investment amount, SIP growth, diversification etc. This is the main reason why the Gold Mutual Fund is popular today.
As the Gold funds are open-ended, they help create wealth by investing in Gold Exchange Traded Fund units and using the potential of gold as a commodity.
Meanwhile, The return on gold investments correlates to the Gold Exchange Traded Fund. As it is the newest way to invest in gold, you must learn all of its aspects, in brief, covered in the article below.
Also Read : Low Risk Mutual Funds, Best Dividend Paying Mutual Funds, Best International Mutual Funds In India
Best Gold Mutual Fund (Updated 2022)
List of Gold Funds in India
Below is the list of top gold funds in India. You can pick any of the Gold Fund that matches your preference.
1. Axis Golds Fund
It is an open-ended gold fund scheme most suitable for investors seeking investment predominantly in Axis Gold Exchange Traded Fund to obtain a return similar to the underlying Fund and for those seeking capital appreciation over the medium to a longer period.
Investors investing in the Axis Golds Fund get multiple benefits from the investment.
It includes Low cost of holding, No demat account required, No transaction charges on purchasing and selling, transparent pricing based on the international price movement of gold, etc.
The Axis Gold fund mainly works upon generating returns that closely correlate to the returns obtained through Axis Gold ETF.
2. Aditya Birla Sun Life Gold Fund
The Aditya Birla Sun Life Gold Fund is another open-ended fund that provides returns that tracks returns provided by its Gold ETF.
It provides an inflation-beating growth over the long term. A year's return on this investment is on an absolute basis and a CAGR basis for more than one year.
The benefits offered by Aditya Birla Sun Life Gold Fund include good diversification, ease of sale, good liquidity level, and Hedge against inflation.
Though the Fund has a moderately high risk, investing in it depends on your risk-bearing capacity.
3. Canara Robeco Gold Savings Fund
It is an open-ended fund scheme introduced by the Canara Robeco Group. The Fund invests in the Canara Robeco Gold ETF, allowing investors to invest directly in the funhouse.
At the end of the scheme period, the growth option of the investment fund provides capital appreciation to the investors.
Though, to provide the capital appreciation, the Canara Robeco Gold Savings Fund closely matches the returns provided by its Gold ETF.
The minimum application amount to invest in the Canara Robeco Gold Savings Fund is Rs. 5000.
The Fund offers the most favourable returns to the investors and special benefits like SWP, STP, and SIP features, making it a most lucrative investment tool for the investors.
4. HDFC Gold Fund
The HDFC Gold Funds' vision enhances the investors' interest. It is an open-ended scheme fund with a moderately high-risk factor that works on generating capital appreciation in the long term.
They invest in companies' equity and equity-related instrument, which in turn comers a very profitable investment. The Fund emphasizes the control of portfolio risk, which helps avoid fads.
5. ICICI Pru Regular Gold Savings Fund:
India's most popular mutual fund house offers multiple mutual fund options to investors.
It includes Hybrid funds, equity funds, solution-oriented funds, debt funds etc.
The open-ended fund scheme of the ICICI Prudential Gold saving funds tens to generate capital appreciation for the long term through investment.
The minimum investment required in the ICICI Pru Regular Gold Savings fund is Rs.100. An investor in this must carry a Pan card, ID proof, address proof and passport size for submission. The investment is appropriate for investors seeking a long-term wealth creation solution.
6. IDBI Gold Fund
The IDBI Gold Fund is an open-ended commodities fund of IDBI Mutual Fund House launched on 14th August 2012.
The Fund's main objective is to generate returns that closely correlate to the funds obtained through its Gold Exchange Traded Fund.
Since its launch, the IDBI Gold Funds have generated a 3.44% return for investors. The risk level in this investment is generally high, which may also change over time.
Today, the current net asset value of the IDBI Gold Fund is Rs. 13.9281 and requires a minimum investment of Rs.5000 to invest in its Fund.
7. Invesco India Gold Fund:
It is a fairly new fund in the gold mutual fund market but generates higher returns.
It has a high expense ratio of 0.45% with a higher exit load period of one year. The Invesco India Fund has beat the category average in the longer term.
The minimum investment required to invest in Invesco India Gold Fund is Rs. 500
It has generated 10.6% fund returns in the last five years at a 4.1% CAGR. Like all other gold mutual funds, the Invesco India Gold Fund aims to generate returns closely correlated with its Gold Exchange-traded Funds.
8. Kotak Gold Fund
Generating returns by investing in the units of the Gold Kotak Exchange Traded Fund is the main motive of the Kotak Gold Fund.
Today, the Net Asset Value of the Kotak Gold Fund is Rs. 21.7398 and has generated returns at 4.57% CAGR since its inception.
Investors seeking returns in line with physical gold from medium to long term should invest in the Kotak Gold Fund.
Meanwhile, they can also take suggestions from their financial advisor to know if the product is appropriate for them or not. The risk level in this investment is generally high; this investor should invest in it accordingly.
9. Quantum Gold Savings Fund:
The Current Net Asset Value of Quantum Gold Savings Fund for the growth option of its direct plan is Rs. 3346. Its category returns for one year are 4.13%, for three years is 16.22% for five years is 10.74%.
Whereas its trailing returns for over year is 3.96%, for three years is 10.71%, and for five years it is 6.61% since its launch.
The minimum investment amount for investing in Quantum Gold Savings Fund is Rs.500, having an exit load of 0%.
The investment is benchmarked against the domestic price of gold and provides capital appreciation through investment in its Gold ETF.
10. Reliance Gold Savings Fund:
It is a new concept of investing in gold, as it enables an investor to invest without signing up for a Demat account.
It is appropriate for long-term investors who invest in Lump Sum or through SIP.
The Reliance Gold Savings Fund is a very good investment option, as it provides a convenient way to invest in the Gold commodity.
11. SBI Gold Fund
It is the most trusted investment option in which the returns are taxed at a marginal rate.
It has generated 7.55% returns in one year. Also, the SBI Gold Fund scheme has invested 99.87% of its assets in its Gold Exchange Traded Fund and the remaining in the cash and cash equivalent instruments.
Things to Consider As An Investor
Now that you have understood what Gold Mutual Fund is and the benefits one gets in investing in gold mutual funds let's discuss a few things to consider before investing.
1. Seasonal Behavior: As far as performance is concerned, gold is prone to seasonal response. It generates higher returns only during insecurity period in the market. You may find it lagging behind another asset at all other times.
2. Lower returns: Gold may not give you high returns in contrast to equities. The investment in gold is driven for a safer haven during a market crisis. When the investment acquires confidence, investors might shift to riskier options like bonds and stocks. Thus, gold may not be a suitable option for wealth creation in the long term.
3. Dynamic Portfolio Allocation: Gold is not a poor asset class. One can think of allocation a part of their portfolio towards its physical form. Although, one should always be calculative about it.
You may consider a higher portfolio allocation towards the gold commodity during a market crisis. With time, as the market recovers from the market depression, you should switch the allocations to a good asset class.
A strong and positive approach towards the change in allocation may help you enjoy the gold fund's investment benefits.
4. Diversification issues: Sometimes, investors expand the gold in the market to reduce the risk to the portfolio, Although it may not be a good asset class for diversification of the portfolio, mainly for the investors holding small and medium-sized portfolios.
It is because the return generating capacity of gold is generally low in contrast with other asset classes.
A small investment may allocate gold for big-sized portfolios to cover the risk without spoiling the goal accomplishment.
How to Invest in Gold Funds?
Investment in Gold Funds is made in a hassle-free and paperless way. Follow the steps mentioned below to invest in Gold Funds today.
STEP1: Sign up with the most trusted gold funds investment website or web portal. This can be done by entering your basic details such as name, date of birth, age, address, and email ID.
You will also require your PAN card, address proof and identity proof to upload online. After you have successfully created your account, it's just a matter of seconds.
STEP2: Enter all the requested details asked for investing in the funds.
STEP3: Complete your e-KYC for a hassle-free experience.
STEP4: Invest in your choice of gold among the ones listed on the website. It may include the Fund by category, top funds by investment duration, new offers etc.
STEP5: Register SIP or make lump sum investments in the gold fund you have shortlisted, and then you are done with the investment process.
Henceforth, these are the steps to be followed to invest in the Gold mutual funds. With the digital investment portal, you do not have to struggle with the physical forms or stand in the long queues.
You can save your time and energy and make a profitable investment in less than 15 minutes.
Advantages of Gold Mutual Funds
Following are the advantages of gold mutual funds one should know-
1. Affordability: Gold mutual funds investments are extremely affordable. You need to pay Rs. 4690 to buy one gram of gold, which may not be affordable for a few investors. Hence, they can invest in the Gold Mutual Funds that only require Rs.100 per month.
2. Protection from Equity Markets: Equity and Gold markets negatively correlate. Thus the price of gold will automatically increase as the market falls.
3. Gold is inflation: Inflation refers to the situation when the price of goods and services increases. In such a situation, the gold mutual funds come to protect against inflation.
4. Easy to Sell: The gold mutual funds are easy to sell as they can be redeemed for the current gold price without any deduction.
5. Low storage cost: Storing physical gold is extremely risky, as no one can keep a large amount of gold at home due to theft activities. Thus, gold mutual funds are the best option as you hold the electronic form of units equivalent to the physical gold.
Disadvantages of Gold Mutual Funds
While the Gold mutual funds are stored with various advantages, it has some disadvantages too. One must learn all of them before stepping into the Gold mutual funds.
1. Double Fund Management Charges: The fund manager buys the units of Gold ETFs when you invest in a gold mutual fund. After that, the gold ETF buys the actual physical gold. In the process, one ends up paying double fund management charges. One to the gold ETF manager and the charge to the mutual fund manager.
2. Average returns: Unlike the equity mutual funds, in the gold mutual funds, the possibility of getting the higher returns is very less.
3. Highly volatile: Many investors think that gold mutual funds are less volatile and stable, but this is false. In the previous year, the gold mutual funds experienced a downward journey. Hence, investors should be careful when investing in gold.
4. No Dividends: Unlike the debt mutual funds or equity funds, the gold mutual funds do not announce their dividends. Thus, do not misunderstand that you will get to know the dividends when you invest in them.
How Are Gold Funds different from Gold ETFs?
As an investment, gold has evolved. Earlier, physical gold was the only way to invest. But today, investors have various options such as digital gold, sovereign gold bonds, gold ETFs and gold mutual funds.
Among these four major options, the Gold ETFs and gold mutual funds have witnessed a major inflow from investors. While both the investment options have the same underlying assets, they have some differences too.
1. Price discovery: Gold ETFs are traded on a real-time basis, which means one can buy and sell them anytime they want, which is not possible in the case of gold mutual funds, as one can trade over them only at the time of business hours.
2. Ease of Purchase: A Demat account is compulsory while investing in Gold ETFs, as they are traded on the stock exchange. At the same time, no Demat account is required to invest in gold mutual funds.
3. Easy Exit: Gold ETFs do not have any exit loads; one can buy and sell them without any penalty. Whereas, in the case of gold mutual funds, there is an exit load period of 1 or 2 years, which means if you sell them before the mentioned period, you will have to pay additional charges.
4. High Expense Ratio: As the Gold ETFs are passively managed, they have a low expense ratio. In the case of gold mutual funds, the expense ratio is high as they are actively managed funds.
Benefits of Investing in a Gold Fund
Gold Fund investments form an integral part of an investor's portfolio. Following are the benefits associated with gold fund investment one will surely enjoy.
- One can invest in metal without opening a Demat Account.
- Investment in Gold Mutual provides an advantage of exposure to the gold asset to the investors simply.
- One can get the advantages of gold's potential value without possessing the physical gold.
- As the Gold Funds units can be bought and sold from any part of the country at any business hours, the Goods and Services tax won't apply to the change in the price of the gold.
- Gold Fund Investment is a safe investment as the price of gold does not fluctuate too often.
- It is an easy way to expand your investment portfolio.
- It can be optimized as a shield against inflation and geographical instabilities.
- gold is a safe investment as a stake against the falling currency.
- The Gold Fund units are very economical as there is no entry or exit system for buying them.
- The Gold Exchange Traded Funds enable easy trading through a fund manager or a stockbroker.
- One can use the Gold Exchange Traded Funds as security while purchasing money from a financial institution or a bank.
- Since each unit of the Gold Exchange Traded Funds is financed by the pure gold prices, there is no threat to the purity.
Also Read : Best ICICI Mutual Funds, Best Small Cap Mutual Funds in India, Best Mid Cap Mutual Funds
Conclusion
Gold mutual funds are funds that help you in investing in gold. They are the electronic form of gold equivalent to its physical form. Most gold mutual funds in the country invest in domestic gold exchange-traded funds.
A few of them give you international exposure; you need to know every aspect of the gold mutual funds, including benefits, things to consider as an investor, advantages, disadvantages, etc. After understanding each factor, you should invest accordingly.
I hope you liked our article on Best Gold Mutual Fund, if you have any comments or suggestions do share them in the comments below.
frequently asked question
Q1. Which is better, gold or gold mutual fund?
Gold mutual funds are way better than physical gold. Buying gold is expensive as you need to ensure its safety by yourself. Whereas, in the case of gold mutual funds, you do not need to be concerned about the safety, as it's stored electronically.
Q2. Is it safe to invest in Gold ETF?
Yes, it is completely safe to invest in a gold exchange-traded fund as the units of those gold ETFs are stored in the Demat account. There is only risk with the investment; as the price of gold increases, Gold ETF also increases.
Q3. Which is better, digital gold or gold ETF?
Gold ETFs are better than digital gold, as digital gold is in a regulatory grey area, because of which the level of risk is high in its investment. Whereas the gold ETF is regulated by SEBI, which gives a secure feeling to the investors of their funds.
Q4. How is the Axis Gold Fund?
The Axis Gold is Fund by investing in its Gold exchange-traded fund units. The minimum amount required to invest in the Axis Gold Fund is Rs.5000 with a 1% exit load.
