Gold has traditionally been a favourite investment option for Indian investors. But buying physical gold has its challenges such as verifying its purity, ensuring secure storage and loss during sales, if it is in the form of jewellery. These problems can be bypassed if you invest in gold through gold exchange traded funds or gold ETFs. But what are they?
Investing in gold through mutual funds Typically, mutual funds that invest the money raised from investors in gold, offered two variants. First is gold ETF and the other being gold fund.
By investing in gold ETFs, you own gold in the electronic form. ETFs track the price of physical gold in the same way other ETFs like equity ETFs, track a particular stocks index.
On the other hand, gold funds are typically like any other fund of funds. It invests predominantly in the units of its own gold ETF.
Buying Gold ETFs To buy gold ETFs, you need to have a demat and trading account with a broker. You can then buy and sell units of gold ETFs like equity shares during the market hours at the prevailing rate. However, if you do not have demat account, you can invest in a gold fund like any other mutual fund schemes either through your mutual fund distributor, directly from the fund house or their Registrar and Transfer (R&T) agent.
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