Gold Mutual Funds

Right from our ancestors to the millennials, love for Gold is timeless! Especially in India, it is not just a yellow metal but a pride to have & wear. It has been the foremost asset class as investment. It’s not just an investment option but it brings along its own inseparable emotional connect. People never have & never will stop possessing gold. However, in these modern times the options for buying gold are not restricted to physical gold. One of the preferred modes to invest in Gold is “Gold Mutual Funds”.

Gold Mutual Funds are open ended funds, with ease of investing like any other mutual fund, where investment can begin with a SIP of just Rs. 1,000. These funds invest in units of Gold Exchange Traded Funds(ETF’s). As the underlying asset is physical gold, the NAV of the fund is affected by the price of yellow metal.

Investing in Gold has become very simple & effective with Gold Mutual Fund. Some of the advantage are as follows:

  • No weight based investing:
    One need not be held by buying in specific grams, rather invest as per their need & availability
  • No making charges:
    One need not pay making charges as there is no requirement to mould the gold
  • No storage cost:
    Storage has always been the primary concern for this precious metal. However, any extra cost for preserving the gold is also eliminated
  • No GST:
    As it’s not purchased in physical form, the GST cost is also saved
  • No Demat Account:
    Unlike investing in ETF, one need not open a Demat account to invest in Gold Mutual funds

 However, some key factors that need to be considered before investing are as follows:

  • Limit your investment:
    Gold performs exceptionally well but only when uncertainties hit the market. Currently in this COVID situation gold has performed exceptionally well, but over long time it also tend to provide very low returns, similar to fixed income products
  • Tax:
    Gold Mutual Funds are taxed similar to Debt mutual Funds. With holding period of less than 36 months attracts tax as per slab rate, however for holding period of more than 36 months attract 20% tax with indexation benefit
  • No Regular income:
    Unlike various other asset classes, gold or any other precious metals do not provide a regular flow of income such as rentals, interest or dividends. Its value just appreciates or depreciates based on demand & supply

Ideally one should look at Gold as a portfolio diversification option, with 10-15% investment considering risk appetite, goal & investment horizon. It is a safety cushion in case of market turmoil.

At Finbingo you can explore the top performing Mutual Funds. Some of them are as follows:

Sr. No. Gold Mutual Funds Risk 3 Years Return 5 Years Return
1. SBI Gold Fund – Direct Moderately High 18.30% 13.21%
2. Kotak Gold Fund – Direct Moderately High 19.00% 13.48%

 

One need not wander for investing in Gold Mutual Funds, simply begin with Finbingo.com. Investing made easy!

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Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing. Past performance is not indicative of future returns.

Please consider your specific investment requirements, risk tolerance, investment goal, time frame, risk and reward balance and the cost associated with the investment before choosing a fund, or designing a portfolio that suits your needs.