A gold fund is a type of investment fund that holds assets related to gold. The two most common types of gold funds are those that hold physical gold ingots, gold futures contracts, or gold mining companies. Gold funds are funds that invest in gold through gold exchange traded funds (gold ETFs) or gold fund funds (gold FOFs). Gold ETFs are passive investment instruments that are based on gold prices and invest in gold bullion.
Therefore, investing in gold FOF provides indirect exposure to physical investments in gold in electronic form. In this way, investors can take advantage of the benefit similar to that invested in physical gold as an asset. Another alternative to investing in gold bullion is to buy a stock of a gold stock exchange fund (ETF) such as PDR Gold Shares (GLD). Investors can also invest in gold mutual funds such as Tocqueville Gold (TGLDX) and Gabelli Gold Load-Waived (GLDAX, LW).
Each share in the fund represents a portion of gold. For example, each share can equal one-tenth of an ounce. You can buy a fund just like you would a stock, at a brokerage firm or other financial institution that sells gold ETFs and gold mutual funds. In addition, the minimum investment amount that would need to be made in Gold Mutual Funds is INR 1,000 (as a monthly SIP).
Since this investment is made through a mutual fund, investors can also opt for systematic investments or withdrawals. As units of Gold Mutual Funds can be bought or sold at the fund house, investors do not face liquidity risks. For example, a popular gold fund that invests directly in gold futures contracts is the SPDR Gold Trust (GLD). Although physical gold was preferred before, gold mutual funds are clearly better in all aspects (except for ornamental purposes, where you have to buy physical gold), with benefits such as the minimum investment amount, diversification, no need for a Demat account, the growth of SIPs, etc.
Those who have recently entered the world of investment may feel more comfortable with gold ETFs and mutual funds. After all, the cost of equipment, personnel, and other fixed costs that mining companies assume remains fairly static regardless of the price of gold, which means that if the price of gold increases significantly, this could have a substantial positive effect on the profit margins of gold mining companies. As demand for gold changes, the value of gold may fluctuate depending on the buying and selling activities of ETFs. Invesco India Gold Fund Provide returns that closely correspond to the returns provided by the Invesco India Gold Exchange Traded Fund.
Nippon India Gold Savings Fund The investment objective of the Plan is to try to provide returns that closely correspond to the returns provided by Reliance ETF Gold BEES. When an investor invests in these mutual funds, AMC use the money to buy gold ETF units, which in turn invest in physical gold. The advantage of liquidating FOFs in gold instead of physical gold is that you have flexibility in terms of the amount you want to convert into cash. Considering that the underlying asset of gold ETFs is physical gold, the value of gold mutual fund units depends on the price of the commodity.
For starters, an investor might want to buy a gold fund that has gold bullion or gold futures as a way to hedge against the risk of their purchasing power being eroded by inflation. In general, the AMC (Asset Management Company) invests in the shares of unions that produce or distribute gold, shares of mining companies, and physical gold. Below is the key information from the Nippon India Gold Savings Fund Nippon India Gold Savings Fund Growth Launch Date March 7 11 NAV (April 21) 2 23.8672 ↓ -0.16 (-0.68%) Net Assets (Cr) 1550 on March 31 23 Gold Category: GoldAMC Nippon Life Asset Management Ltd. HDFC Gold Fund To seek capital appreciation by investing in units of the HDFC Gold Exchange Traded Fund (HGETF).