Gold ETFs vs Gold Mutual Funds: Where should you invest this Akshaya Tritiya?

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Indians love to buy gold, especially on Akshaya Tritiya. So what should you buy this time? Physical gold, Sovereign gold bond (SGB), Gold ETFs (Gold Exchange Traded Funds), Digital gold or Gold Mutual Funds? 

Akshaya Tritiya, which falls on 3 May this year, is celebrated with great pomp and show. The occasion is considered to be extremely auspicious for Hindus and is celebrated by buying gold. It is believed that buying gold brings prosperity and good luck.

Gold ETFs Vs Gold Mutual Funds

Chintan Haria, Head – Of product Development & Strategy, ICICI Prudential Mutual Funds talks about how Gold ETFs vary from Gold mutual funds. So, this will be handy for those planning to invest in the yellow metal but are confused between the two.

1) Gold Exchange Traded Funds (ETFs) invest in gold of 99.50% purity, while the Gold Funds invest in gold ETFs.

2) One can start investing in a Gold Fund with a minimum of Rs1,000. However, in the case of Gold ETFs, the minimum investment amount would be equivalent to the current price of 1 gram of gold.

3) Gold ETFs prove to be cheaper for investors as there are no exit loads. On the other hand investor has to pay an exit load to the Gold Fund in case of redeeming units before one year is completed.

4) Since Gold ETF units are traded on stock exchanges, one can buy or sell at any point of the day during the trading hours. In case of Gold Funds, one can redeem only at the end of the day and would have to apply to the Fund house for fresh buying.

5) In case of the Gold ETFs, the SIP mode of investments is nearly non-existent. However, the Gold Mutual Funds allow SIPs.

6) A Demat account is mandatory for investments in Gold ETFs, while one can invest in Gold Mutual Funds even without a Demat account.

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