Gold has long been revered as a safe-haven asset, offering investors stability and diversification in times of economic uncertainty. While traditional methods of investing in gold, such as purchasing physical bullion, come with their own set of challenges, Gold Mutual Funds present a convenient and efficient alternative. In this guide, we delve into the benefits of investing in Gold Mutual Funds and explore the top options available in the market.
Understanding Gold Mutual Funds:
Gold Mutual Funds are investment vehicles that primarily invest in gold as a commodity. These funds provide investors with exposure to the price movements of gold without the need to physically own and store the metal. By pooling investors’ funds, Gold Mutual Funds offer the opportunity to access gold as an asset class through professionally managed portfolios.
Benefits of Investing in Gold Mutual Funds:
Convenience: Gold Mutual Funds eliminate the need for investors to store physical gold, thereby mitigating storage costs and security concerns associated with owning bullion.
Liquidity: Gold Mutual Funds offer instant liquidity, allowing investors to buy and sell units at prevailing market prices without the hassle of finding buyers or sellers for physical gold.
Cost-effectiveness: Unlike physical gold, Gold Mutual Funds do not incur additional charges such as making charges or melting charges. Moreover, the expense ratio of Gold Mutual Funds is typically lower compared to the costs associated with owning and maintaining physical gold.
Diversification: Including Gold Mutual Funds in a diversified investment portfolio can help spread risk and reduce overall portfolio volatility, especially during periods of market turmoil.
Professional Management: Gold Mutual Funds are managed by experienced fund managers who employ sophisticated investment strategies to optimize returns and manage risk effectively.
How Funds Are Shortlisted:
The process of shortlisting Gold Mutual Funds involves rigorous analysis and evaluation to identify funds that offer the best potential for returns and align with investors’ objectives. The key factors considered during the shortlisting process include:
Track Record: Funds with a proven track record of delivering consistent returns over various market cycles are given preference.
Fund Manager Expertise: The performance, outlook, and asset allocation strategy of the fund manager play a crucial role in evaluating fund suitability.
Market Parameters: Funds are analyzed under different market scenarios to assess their performance and correlation with market volatility.
Expense Ratio: The expense ratio, which represents the annual operating expenses of the fund as a percentage of its assets under management, is closely scrutinized to identify cost-effective options.
Top Gold Mutual Funds:
Axis Gold Fund (G) – Direct Plan:
AMC Name: Axis Asset Management Company Ltd.
Inception Date: 01 Jan 2013
AUM (Mar-2024): ₹410.00 Cr.
Expense Ratio: 0.17%
Risk Rating: High
Objective: To generate returns that closely correspond to returns generated by Axis Gold ETF.
The Axis Gold Fund, managed by Axis Asset Management Company Ltd., aims to replicate the returns generated by Axis Gold ETF. With an inception date of January 1, 2013, this fund has garnered an AUM of ₹410.00 Cr. as of March 2024. The expense ratio of the fund stands at 0.17%, making it a cost-effective option for investors seeking exposure to gold. However, it’s important to note that the fund carries a high-risk rating, typical of investments in commodities like gold. Investors considering this fund should evaluate their risk tolerance and investment objectives before making a decision.
HDFC Gold Fund (G) – Direct Plan:
AMC Name: HDFC Asset Management Company Limited
Inception Date: 31 Dec 2012
AUM (Mar-2024): ₹1,810.91 Cr.
Expense Ratio: 0.18%
Risk Rating: High
Objective: To seek capital appreciation by investing in units of HDFC Gold Exchange Traded Fund.
Managed by HDFC Asset Management Company Limited, the HDFC Gold Fund aims to achieve capital appreciation by investing in units of HDFC Gold Exchange Traded Fund. Since its inception on December 31, 2012, the fund has witnessed significant growth, with an AUM of ₹1,810.91 Cr. as of March 2024. The fund’s expense ratio stands at 0.18%, slightly higher than that of the Axis Gold Fund. Investors should carefully consider the fund’s risk rating, which is classified as high, and align it with their risk appetite and investment goals.
Kotak Gold Fund (G) – Direct Plan:
AMC Name: Kotak Mahindra Asset Management Company Limited
Inception Date: 01 Jan 2013
AUM (Mar-2024): ₹1,677.12 Cr.
Expense Ratio: 0.15%
Risk Rating: High
Objective: To generate returns by investing in units of Kotak Gold Exchange Traded Fund.
The Kotak Gold Fund, managed by Kotak Mahindra Asset Management Company Limited, seeks to generate returns by investing in units of Kotak Gold Exchange Traded Fund. Since its inception on January 1, 2013, the fund has accumulated an AUM of ₹1,677.12 Cr. as of March 2024. With an expense ratio of 0.15%, the fund offers a cost-effective option for investors looking to gain exposure to gold. However, investors should be mindful of the fund’s high-risk rating and assess their risk tolerance accordingly.
Nippon India Gold Savings Fund (G) – Direct Plan:
AMC Name: Nippon Life India Asset Management Limited
Inception Date: 01 Jan 2013
AUM (Mar-2024): ₹1,709.27 Cr.
Expense Ratio: 0.13%
Risk Rating: High
Objective: To provide returns that closely correspond to returns provided by Nippon India ETF Gold BeES.
Managed by Nippon Life India Asset Management Limited, the Nippon India Gold Savings Fund aims to provide returns that closely track the performance of Nippon India ETF Gold BeES. Since its inception on January 1, 2013, the fund has amassed an AUM of ₹1,709.27 Cr. as of March 2024. With an expense ratio of 0.13%, the fund offers a cost-effective option for investors seeking exposure to gold. However, investors should carefully evaluate the fund’s risk rating and align it with their investment objectives.
SBI Gold (G) – Direct Plan:
AMC Name: SBI Funds Management Limited
Inception Date: 01 Jan 2013
AUM (Mar-2024): ₹1,603.76 Cr.
Expense Ratio: 0.10%
Risk Rating: High
Objective: To provide returns that closely correspond to returns provided by SBI Gold Exchange Traded Scheme (SBI GETS).
Managed by SBI Funds Management Limited, the SBI Gold Fund aims to deliver returns that closely align with the performance of SBI Gold Exchange Traded Scheme (SBI GETS). Since its inception on January 1, 2013, the fund has accumulated an AUM of ₹1,603.76 Cr. as of March 2024. With a low expense ratio of 0.10%, the fund offers a cost-effective option for investors seeking exposure to gold. However, investors should be aware of the fund’s high-risk rating and assess their risk tolerance before investing.
Investing in Gold Mutual Funds offers investors a convenient and cost-effective way to gain exposure to gold as an asset class. By leveraging the expertise of professional fund managers and eliminating the hassles associated with physical gold ownership, investors can reap the benefits of gold investments while diversifying their portfolios. However, it is essential for investors to conduct thorough research and consider their investment objectives and risk tolerance before investing in Gold Mutual Funds.
Disclaimer:
It is important to note that the list of Gold Mutual Funds provided in this guide is illustrative and not exhaustive. Investors are advised to conduct their own research and consult with financial advisors before making investment decisions. The inclusion of funds in this guide does not constitute a recommendation to buy or sell any fund. The list is for educational purposes only and may be subject to change without prior notice.
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