Gold ETFs vs Gold Mutual Funds: What is best for you?
Investing in gold is an ideal hedge against the volatility of equity investments and inflation
Gold investment
Although the price of gold can be volatile in the short term, the returns in the long term can be rewarding
Long-term investment
Gold investment can be done in many forms like buying gold jewellery, gold coins, gold bars, gold exchange-traded funds, Gold funds, sovereign Gold Bond (SGB ) scheme
Physical Gold, Gold ETFs, Gold funds
Gold Exchange Traded Funds (ETFs) invest in gold of 99.50% purity, while Gold Funds invest in gold ETFs
Gold ETFs vs Gold Funds
Investors can start investing in a Gold Fund with a minimum of Rs 1,000. For Gold ETFs, the minimum investment amount is equivalent to the current price of 1 gram of gold.
How to invest in Gold ETF, Gold Funds
Both Gold ETFs and Gold Funds have the Net Asset Value (NAV) calculated at the end of any business day.
Gold value end of the day
Gold ETFs prove to be cheaper for investors as there are no exit loads. Investors need to pay an exit load to the Gold Fund in case of redeeming units before one year is completed.
Gold ETFs over funds
Gold mutual funds don't require Demat accounts since they invest in AMCs' gold ETFs. Buying and selling gold ETFs requires a Demat account.
Demat accounts for Gold
Gold Mutual Funds allow SIPs. In case of the Gold ETFs, the SIP mode of investments doesn’t exist.
Mode of SIPs
Investors should know the key costs for gold ETFs include Demat charges, Expense Ratio, and brokerage charges taking the annual cost to approximately 0.5-1%
Hidden costs for Gold
For Gold Funds, the charges are close to 0.6-1.2% annually, which includes the gold ETF charges and 0.1-0.2% charges for managing the gold
Total cost for Gold funds
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