Gold mutual funds don't require Demat accounts, as they invest in AMC gold ETFs. It allows investments in SIP, while gold ETFs do not. Gold funds have an exit charge if they are redeemed within a year, while gold ETFs don't. Buying and selling gold ETFs requires a Demat account.
Compared to mutual or gold-listed funds, gold mining stocks offer investors more direct exposure to the precious metal. Unlike gold mutual funds, the underlying asset of gold ETFs are the shares of gold mining companies or physical gold itself. Gold mutual funds are equity funds, in which the portfolio consists of shares of companies involved in the extraction, production and distribution of gold. There are many ways to invest in gold given the variety of investment vehicles available in the gold market.
Investors must manage their market risk, and gold funds are a great way to diversify their gold investments. In addition, investors who are unable to invest a high value in the purchase of physical gold can invest through gold funds. These commodity mutual funds invest in companies that produce gold or gold ingots, including physical gold bars and coins. However, in the case of gold ETFs, the minimum investment amount would be equivalent to the current price of 1 gram of gold.
During the day of trading on the stock exchanges, gold investors can easily enter and exit the shares of mutual funds in gold, making this investment in gold liquid. Therefore, investors who want to invest in gold for profits or convert it into physical gold in the future may consider investing in gold ETFs. Chintan Haria, director of product development strategy %26 at ICICI Prudential Mutual Funds, explains how gold ETFs differ from gold mutual funds. On the other hand, while gold ETFs and gold mutual funds are quite similar, they have some differences.
Some people may prefer to buy digital gold or gold ETFs instead of buying physical gold bars. Compared to gold ETFs, gold mutual funds offer slightly more exposure to risk because they invest in gold stocks, which tend to be price sensitive. That said, experts say, investing in gold ETFs and gold mutual funds is a better way to invest in gold.