Due to the continuous rise in the prices of gold, the attraction of investing in it has increased. After the closure of the Sovereign Gold Bond Scheme, investors can invest in Gold ETFs and Gold Mutual Funds. Investing in these is quite easy. Money can be easily withdrawn from the scheme if needed.
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The government has discontinued the Sovereign Gold Bond Scheme (SGB). Due to the rise in gold prices in the last few years, it had become difficult for the government to continue this scheme. The price of gold in the global market has crossed 2,800 per ounce. Recently it reached $ 2,830. In India too, the price of gold had reached Rs 84,900 per 10 grams. The reason for this is being said to be the tariff policy of US President Donald Trump. Commodity experts say that in view of the uncertainty in the global economy, the rise in gold is expected to continue.
After the closure of the Sovereign Gold Bond (SGB) scheme, now the option of Gold ETF and Gold Mutual Fund is left for investing in gold. Investment can be made in both of these in the secondary market. If needed, you can easily sell the investment. Investing in both these options is easier than investing in physical gold, because in these you do not have to worry about the purity of gold.
Gold ETF
Gold ETF tracks the prices of physical gold. This means that the prices of Gold ETF fluctuate according to the fluctuations in the prices of gold. The value of Gold ETF is based on the price of gold. This is because Gold ETF invests its money in physical gold. The value of one unit of Gold ETF is equal to one gram of gold.
Gold ETFs are listed in the stock markets. Therefore, investing in them is safe. They also have good liquidity. A demat account is required to invest in gold ETFs. Apart from this, entry load is charged on investing in gold ETFs. Exit load is charged on selling.
Gold Mutual Fund
Gold mutual funds are open-ended funds that invest in units of gold ETFs. Every gold mutual fund has a fund manager who takes investment decisions. The units in a gold mutual scheme have a net asset value (NAV). Since the assets of a gold mutual fund are managed by the fund manager, its returns can be higher than the returns of gold in the long term. The expense ratio of gold mutual funds is slightly higher than that of gold ETFs.
Investment in gold mutual funds can be done with less money than gold ETFs. This makes it easy for retail investors to invest in it. A demat account is also not required to invest in gold mutual funds. According to Value Research, the one-year return of gold mutual funds is 29.45 per cent.
