Best Gold Mutual Funds

Gold Mutual Funds are Gold Funds that invest in Gold ETFs. With the increase in popularity of Gold Mutual Funds, there has been a significant increase in the number of funds offering this investment option. This may seem like a good thing for the ever-increasing investors, but it has also posed a challenge.

Investors now are asking how they will know which fund is the best to invest with and which one is not. It would help if you considered many factors as an investor before choosing your Gold Mutual Fund.

Here is a list of the best Gold Mutual Funds that we have reviewed that you can invest with.

What Are The Top 5 Gold Mutual Funds?

We have tried to make it easy for you to choose the Best Gold Mutual Fund to invest in by narrowing it down to 5 Funds.

#1 Axis Gold Fund

On October 20, 2011, the gold fund was launched to generate returns that closely respond to Axis Gold ETF-generated returns. Since its launch, the moderately high-risk fund has given a 4.2% return.

Key features:

  • 0.4 expense ratio
  • 1000 and 5000 rupees minimum SIP and investment, respectively
  • 15.394 rupees NAV as of May 13, 2022

#2 SBI Gold Fund

The SBI-gold fund was launched on September 12, 12, 2011, to provide returns that respond closely to SBI – ETF Gold. It is a moderately high-risk fund with a 4.1% return since its launch.

Key features:

  • 0.4 expense ratio
  • 500 rupees minimum SIP investment
  • 15.3732 rupees NAV as of May 13, 2022

#3 Kotak Gold Fund

It is a gold fund launched on March 20, 2011, with an investment objective of generating returns through investment in units of Kotak Gold Exchange Traded Fund. Since its launch, Kotak has been a moderately high-risk fund with a 6.6% return.

Key Features:

  • 20.44 rupees NAV as of May 13, 2022
  • 0.56 expense ratio
  • 1000 rupee minimum SIP investment

#4 Invesco India Gold Fund

The Gold Fund launched on December 5, 2011. It is a fund with a moderately high risk, and since its launch, it has given a 4% return.

Key Features:

  • Moderately high risk
  • 0.43 expense ratio
  • The minimum investment is 5000 rupees

#5 Nippon India Gold Savings Fund

Launched on March 7, 2011, the Gold Fund’s primary investment objective is to provide returns that respond closely to Reliance ETF Gold BeES. It is a moderately high-risk fund with a 6.5% return since its launch.

Key Features:

  • 0.39 expense ratio
  • NAV as of May 13, 2022, is 20.2726 rupees
  • The minimum SIP investment is 100 rupees

Why are gold funds becoming popular?

Most people invest in Gold for various reasons. However, there are many available options for investing in Gold other than buying physical Gold. Investing in Gold Mutual Funds has become a popular option because of its clarity in every aspect.

The popularity of Gold Mutual Funds can be attributed to the following factors:

  • Minimum investment amount
  • Portfolio diversification
  • SIP growth
  • No Demat account required

Investors do not face liquidity risks with gold mutual funds as the investment can be easily traded from the fund house. Investors using this investment option do not face the risks associated with physical Gold as the gold funds do not directly invest in physical Gold but indirectly through gold ETFs.

Top Investment Options: Gold Bullion, Silver & Mining Stocks

Most companies offer a variety of investment options for their customers.

Gold Bullion

Refers to physical Gold of high purity that is kept in coins and bars. The bullion is often held as reserves by institutional investors or the central bank and can sometimes be considered legal tender.

Pros

  • Hedge against inflation and market crashes
  • Portfolio diversification
  • Security of value

Cons

  • Storage issues
  • Premiums and taxes
  • Liquidity as it is not a passive income asset

Silver

This is also another excellent investment option, and it involves buying physical high purity silver coins and bars.

Pros

  • Digitally secure wealth
  • Cheaper compared to Gold
  • Mobility in prices

Cons

  • Liquidity problem
  • Theft risk

Mining Stocks

Mining stocks as an investment option involves investing in materials as an ongoing investment and not directly in that commodity.

Pros

  • Dwindling supply equals increased profit
  • Offers different risk levels that suit investors
  • Lack of demand equals plummeting prices
  • Potential for high returns

Cons

  • Lack of information for investor
  • Volatility
  • Complicated process to understand

Gold Funds vs. Gold ETFs: Which is better?

Gold mutual funds are among the newest ways to invest in Gold as an asset. They are gold funds that invest in Gold ETFs (Exchange Traded Fund). A gold mutual fund is a variant of Gold ETFs as they are open funds traded with a gold ETF. Gold mutual funds do not directly invest in physical Gold but somewhat indirectly by investing in Gold ETFs.

Pros of Gold Funds

  • Safe investment
  • Confronts inflation
  • Liquidity is not an issue
  • Cost-effective
  • Diversification

Cons

  • Involves transaction costs
  • Requires more expenditure to manage the fund than Gold ETFs
  • It offers reduced liquidity compared to Gold ETFs

On the other hand, Gold ETFs are passive investment instruments that usually invest in physical gold coins and bars and rely on gold prices.

Pros of Gold ETFs

  • Requires less expenditure on fund management
  • Offer higher liquidity than gold fund
  • No transaction costs involved

Cons

  • Requires a Demat account
  • Do not use SIPs

How Gold Funds and Gold ETFs are different

Gold Funds Vs. Gold ETF

  • Pricing is by way of NAV disclosed at the Prices listed on the stock exchange end of trading hours
  • No Demat account is required / Requires Demat Account.
  • More expenditure on managing the fund / Less expenditure on managing
  • Reduced liquidity / Offer higher liquidity
  • Involves transaction cost / No transaction costs involved
  • Uses SIPs / Does not entertain SIPs

We can say that Gold ETFs are better than Gold Funds from the above comparison.

Who Can Invest in Gold Mutual Funds?

Anyone can invest in Gold Mutual Funds, but they are suitable for not investing in stocks and those who do not have a Demat account. It is also a good option for investors who want an investment that offers high liquidity as the gold mutual funds can be sold or bought easily at the fund houses; hence no liquidity risk is involved.

How to Invest in a Gold Mutual Fund Online

Most companies make investing in gold funds more accessible, paperless, and hassle-free. You can quickly start your investment journey online by following these simple steps.

  1. Opening an investment account
  2. Complete your e-KYC, which takes not more than five minutes
  3. Upload all the requested documents
  4. Invest in your most preferred gold fund amongst the available options.

Final Thoughts

Investing in Gold and other precious metals is an intriguing investment growing every day. However, one investment requires exclusive research to make the best-informed investment option.

With the many gold investment options available for investors, it is essential to learn about each option to select the one that suits your investment needs.

More and more investors are choosing to invest in Gold Mutual Funds, hence growing in popularity. Investing in Gold Mutual Funds is an intelligent way to take advantage of stable market prices and the value of Gold.

However, most of these investors have had challenges choosing the best fund to work with, and for this reason, we decided to review some of the existing funds and provide you with a list of top funds that you can choose to invest with.

About the Author

Since 2008, Savary Gold has been one of the world's leading mining exploration & investment resources for gold and precious metals. SavaryGold.com's mission is to provide proven insider knowledge resources about retirement investing to its readers to make informed investment decisions and better manage risk.

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