What are Best Gold Mutual Funds in India & How to Invest

The asset of gold specially in India has been closely associated to our family lives which has enabled us to invest in this resource in one form or another. This form of asset highlights the value of honor and respect as well as it acts as a supportive resource during financial crises. With so many changes in globalization, there has been a momentous progress in the trade market of gold with gold mutual funds being one of the most recommended ones.

What are Gold Funds?

Some of the best gold mutual funds are flexible schemes in nature. Gold funds are a type of mutual funds that invest in gold reserves which could be direct or indirect. Funds investment via gold are one of the latest methods to invest in gold assets making it really understandable as the funds in this section invest in gold ETFs or Exchange Traded Funds.  Without having the requirement to hold it in physical form, the value here is directly connected to the price of this treasured metal.

Investments in gold assets are conveniently made on stocks of gold producing and distributing syndicates, physical gold, and on stocks of mining companies without having to make the purchase or trade with it in its physical form. The chief idea of the gold funds is to generate wealth for the investors and create support against market crisis.

Features Of Gold Mutual Funds

Investment objective- Gold Mutual Funds are open-ended schemes that invest in Gold Exchange Traded Funds (ETFs). The Gold ETFs are mediums that keep a check on the prices of gold and are listed on leading stock exchanges which includes equity shares. Once you invest in a gold mutual fund, your money is then used by the fund resource to buy units of Gold ETF and you further receives units in the proportion of your investment in the fund. In other words, the growth of your gold investment totally depends on the prices of the gold in the market.

When it comes to investment, it is human nature that we want to experience the benefit of convenience and it is through gold funds that it comes really stress-free to invest as an asset instead of making an effort of physical appearance. Thus, these funds offer a smart and less awkward way to invest. The fund aims to raise your invested capital in link with the growth potential of gold as a commodity over the given speculation period.

Return Possibility- The amount of takeaways that a gold fund generates is periodical in nature and may vary broadly based on many external situations. As the scenario experienced in the stock market, gold mutual funds may not be able to deliver to you remarkably high returns. However, during a market collapse, these funds may even beat stocks. On the whole, you may gain higher returns that can counter inflation.

Suitability- Due to various shortcomings, most of investors may face discomfort in making an investment in physical gold, the scarcity of money being one of them. Thus they find some of the best gold mutual funds to be an appealing opportunity to own gold with the help of smaller and steady investments in gold.

Taxability- If you are aware of the taxing concept of debt funds, you already have most of the knowledge ready with you. If you are involved in the gold fund for less than 36 months (or 3 years), then your gains from the fund are taxed as per your income tax slab. The enduring capital benefits from the fund, attracts the profit of indexation and are taxed at the rate of 20%.

How do Gold Funds work?

Gold funds are open-ended funds suitable for investors who have a desire to take exposure in gold. The investments are made in units of a Gold Exchange Traded Fund (ETF). These are especially for investors who have deep interest in gold bullions and aim to purchase them without facing the risk of storage and safety. The primary aim of gold funds is to create wealth by making use of the potential of gold as a product. It is convenient to invest in gold via gold funds instead of holding authority of the product sensibly. You may enjoy the similar benefit of holding gold physically along with professional fund management.

Each gold fund is allotted a fund manager who takes bets of investment based on the plan of the fund. The profit of a gold fund may closely correspond to that of gold ETF. Additionally, the Net Asset Value (NAV) of the fund may be affected by the total price movement of gold in the market.

Consider the following before investing in Gold Mutual funds:

Gold Prices Variations- The trade market of gold involves the system of demand and supply while especially in gold funds India, and other parts of the world in a way affect gold prices. Further this leads to variation or unexpected changes in gold prices. Even if it is called the safest forms of investment option, but just like any other unpredictable returns in investment made, even the gold funds face challenges and undefined pricing. Often the gold producers don’t have any authority on the market price of gold. 

 No Physical Gold- This is the best way to receive the benefit of gold mutual funds inclusive of digital gold, gold ETFs, and gold bonds. You have the choice to remain invested in the commodity and not own the gold in physical form so you are free from major forms of risk too.

Gold Safety- Many investors think of involving themselves in the market with an aim to ensure that they receive high returns, which is possible through equity instruments. However, investing 100% of your assets in equities is a recommended choice. Opportunely, gold funds verge your portfolio against financial and political crisis. Moreover, they allow you to gain the returns of owning physical gold and its increasing market value and prices.

Risk Involved

In the investment markets, mutual funds in gold are considered as one of the safest options offering a low-risk investment prospect. Yet, they do carry certain risks as they tend to only deliver during disruptions in the market. Thus, in times of overall financial stability mainly in gold funds India, revenues from gold funds can lessen severely.

Conclusion: 

The industry of gold mutual funds is every day rapidly growing offering immense and safe opportunities for investors. This gives them the chance to expect a brighter future when it comes to owning gold if not in the physical form. This article thus is an explanation of helping investors to understand the guidelines before investing in gold funds.