Gold Funds vs Gold ETFs: In Which One You Should Invest?
Gold Funds and Gold ETFs are the best ways to invest in gold. The gold market is experiencing strong performance and contributed to a 30% gain in the past year. Many investors are trying to invest in gold through financial instruments like gold funds or gold exchange-traded (ETFs).
With the gold market showing strong performance and contributing a 30% gain over the past year, many investors are now turning to financial instruments like gold funds and gold exchange-traded funds (ETFs) to make their investments. These two investment options provide exposure to the precious metal without the hassle of having to buy physical gold.
The calendar year 2024 has only seen one scheme so far under Sovereign Gold Bond (SGB), with the interest of investors thus switching towards gold funds and gold ETFs. Between the two choices, investors may be confused about which option they should select for investment.
Gold ETFs are traded on the stock exchanges and allow investors to buy and sell in real-time during market hours, with a minimum investment of one unit. On the other hand, gold funds are priced based on the day-end NAV and allow for SIP investments starting from as low as Rs.500.
For Gold ETFs, you need a Demat account. A Demat account is compulsory for Gold ETFs because the units are stored there digitally. On the other hand, gold funds do not require a Demat account.
Investors can invest in gold funds via a SIP (Systematic Investment Plan), and in gold ETFs, investors cannot invest through a SIP because they require a lump sum payment for purchasing ETF units.
During the last year, gold funds have provided an average return of 21.30% with UTI Gold ETF FoF, which provides the maximum return of approximately 21.80% during the same period. SBI Gold Fund delivered a return of around 21.66%, closely followed by ICIVI Pru Regular Gold Savings Fund (FOF), which gave a return of 21.65% in the past year.
In the last year, gold ETFs offered an average return of 21.94%. LIC MF Gold ETF provided the maximum return of approximately 22.19% during the last year, closely followed by UTI Gold ETF, which offered 22.11% during the same period. Quantum Gold Fund ETF offers a list return of approximately 21.64% during the same period.
