Investing in gold has been a traditional favourite of millions of Indians for generations and people have been buying jewellery and some buy coins and bars. Gold offers steadily appreciating value, a hedge against inflation, and in many regions, social prestige as well. However, it has a few downsides too.
Gold mutual funds, better known as Gold Exchange Traded Funds (ETF) are an effective alternative to putting one’s money into physical gold to gain from its price appreciation. The price of each unit is equal to the price of 1 gram of gold.
Substitute for gold
“Gold ETFs are a brilliant substitute for physical gold. Unlike gold jewellery or coins and bars, you don’t have to lose sleep over storing them safely,” said Prasunjit Mukherjee, investment strategist and CEO Plexus Management Services.
“Gold MF includes Gold ETF, which is clearly the most preferred route to allocate to gold now for the world,” said Nilanjan Dey, director Wishlist Capital Services.
Dey emphasised that gold funds are transparently managed, professionally steered and well-governed. As investment tools, they are inexpensive, convenient, and last but not the least, completely liquid.
Gold ETF AUM in June
Dey said AMFI data stated that Gold ETFs had Rs 34,355 crore net AUM (assets under management) in June 2024.
Moreover, you don’t lose anything if you want to sell your units. On the contrary, if you want to sell gold jewellery, the making charge, which is 30% of above of what you paid to buy the jewellery, will be deducted by the buyer.
There are 17 Gold ETFs in India currently trading in India. Axis Gold Fund, SBI Gold Fund, HDFC Gold Fund, Invesco Gold Fund, ICICI Gold Fund (Fund of Funds), Nippon, Aditya Birla are some of the popular funds in the market.
Returns of Gold ETFs
The returns range from about 13-14%. “One can invest for superior, risk adjusted returns. And ease of investing too is a big driver,” remarked Dey.
In May and June 2024, the inflow into gold ETFs in India stood at Rs 836 crore and Rs 752 crore respectively.
The prices of gold had been rising dramatically till May 2024, thanks to the spurt in central banks of many countries, led by People’s Bank of China, for many months.
According to World Gold Council, Asian funds garnered a record $3 billion between January and June 2024. But a lot of funds – around $9.8 billion – flowed out of such funds in Europe and North America.
(Disclaimer: This article is only meant to provide information. News9live.com does not recommend buying or selling shares or subscriptions of any IPO and Mutual Funds.)
Gold mutual funds or ETFs are becoming a preferred choice of investors. Their prices are linked to the prices of physical gold. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
