Top Rated Gold Mutual Funds

13 June, 2024

Synopsis

• Gold mutual funds offer investors a convenient alternative for gaining exposure to gold without the hassle of physical ownership.

• Gold funds function like any other mutual fund, but invest in physical gold bullion, gold ETFs, or stocks of gold-related companies.

• There are several benefits of investing in gold mutual funds.
  
  

Gold has continued to glitter through the ages. Nothing has been able to erode its value in the long run, be it inflation, deflation, or geopolitics. No wonder then that investing in gold is a wisdom passed over generations.

You may have seen in your family that gold is used as a life relay tool to pass on assets from one generation to the next. Today, gold is used to guard against inflation, market vagaries and economic uncertainties. Investment in gold can be a valuable addition to a diversified portfolio. While it's often seen as a safe-haven asset, it's important to remember that gold prices can fluctuate when the market is uncertain. But buying gold may not be easy for everyone. It is also a hassle in terms of storage and safety, especially for physical gold. So, is there another way to invest in gold than buying coins or jewellery?

Yes, you can invest in gold without actually buying it. Just invest in gold mutual funds!

Let’s dive deep into the world of gold funds, understand their benefits, and learn about some of the best gold mutual funds as of April 2024.

What are Gold Funds?

Gold funds are just like any other equity or debt mutual funds where you can buy the units of a fund. These open-ended funds invest in physical gold bullion, gold exchange-traded funds (ETF) or stocks of gold mining, refining or marketing companies.

Gold funds that invest in gold ETFs aim to have instruments with 99.5% purity, and the domestic price of physical gold impacts their NAV. The funds that invest in gold companies' stocks are thematic funds, and their NAV fluctuates when the stock price changes.

Benefits of Investing in Gold Funds

Convenience in Investing

You can start investing in gold funds with just ₹500. You can invest with a lumpsum or through systematic investment plans (SIP).

Better Liquidity

Gold funds provide better liquidity than physical gold as you can easily sell the units at the fund’s current Net Asset Value (NAV). When you sell physical gold urgently, there is a chance that you might not get the true price. However, that is not the case with gold funds because there is transparency regarding the NAV.

No Purity or Safety Issues

Buying gold jewellery comes with potential issues of purity and difficulty of storage. These problems are eliminated with gold funds because the fund will invest in instruments with a certain purity level considering the fund’s rules. In any case, you can choose from a wide range of gold mutual funds based on their underlying instruments and other parameters. Additionally, gold funds are easier to manage because you get the units in the online form.

Helps in Portfolio Diversification

As you buy stocks and bonds to manage risk and return in your overall portfolio, you can add one more asset class by investing in gold funds. These funds help spread out the risk as gold is unrelated to stocks and bonds, and you can safeguard your portfolio from any market fluctuations.

Suitable for Long Term Investment

Investing in the best gold mutual funds is a good way to invest for the long term and avoid short-term volatility in gold prices. You can take the SIP route to protect yourself from volatility in gold prices and avoid the hassle of keeping an eye on gold’s market price.

Top Gold Mutual Funds

Here are some of the best gold mutual funds in terms of annualised returns as of April 12, 2024. These funds have been performing well over the last 5 years and charge a lower fund management fee or expense ratio than their peers.

Gold mutual funds accumulate money from investors and invest in gold ETFs or gold-related stocks according to the scheme’s objective. You can buy units of such gold funds at your convenience through SIP or as lumpsum. Unlike physical gold, gold funds do not have liquidity, purity or safety concerns.

Gold mutual funds also help you diversify and stabilise your investment portfolio.

While choosing the right gold fund can be daunting, you can do it easily through the HDFC Bank SmartWealth App. Just download the app from Playstore/Appstore, a DIY investing tool that will help you make the right choices based on your investment objective and risk tolerance. Use the app to have a glittering portfolio by investing in the top-rated gold mutual funds. Get ready for a golden future with the HDFC Bank SmartWealth App!

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