Gold mutual funds are just like any other mutual fund, pooling money and investing it. In the case of gold mutual funds, they invest in gold ETFs, which further invest that money in physical gold of the purest quality.
Most investors try to find the right balance in investing, and in their quest to do so, most experts ask them to pay attention to asset allocation. In India, if we look at gold just as an investment, it holds a lot of value, sentimental value.
Over the years, the way we invest in gold has changed. Previously, it was just physical gold, and then came gold-based mutual funds, then Sovereign Gold Bonds, and then ETFs.
SGBs are great, but in this blog, we will compare gold mutual funds and gold ETFs and one important aspect that is not discussed at large.
What are Gold ETFs?
Gold ETFs are the ones that invest in the physical form of gold. They are passive investments, and the idea is to track the price of physical gold. They have a lower expense ratio compared to mutual funds.
What are Gold Mutual Funds?
Gold mutual funds are just like any other mutual fund, pooling money and investing it. In the case of gold mutual funds, they invest in gold ETFs, which further invest that money in physical gold of the purest quality.
Now, let’s talk about one of the hidden factors that most investors have missed.
You see, when investing in any mutual fund, one of the important factors that we look at is the expense ratio. Now that we are and ETFs, we all know that ETFs are supposed to be the ones with low expense ratios. But if you check any platform, gold mutual funds have a low expense ratio.
But how is that possible?
To understand this let’s look at some data.
