Gold is considered as one of the safest havens for investment purposes. The underlying reason is the significant growth rate in gold prices in the last decade. But to the sheer disappointment of investors, recently even this shining metal has fumbled.
Thus, consequently, investors are again looking up to mutual funds as a safe sanctuary for their savings. No matter where you invest, you need to be quite vigilant before investing in mutual funds. So, investing in gold funds is something that can benefit investors.
In this article
What Are Gold Mutual Funds?
Gold funds refer to mutual funds that invest in Gold ETFs .
This category is pretty much self-explanatory as the funds in this section invest in gold ETFs or Exchange Traded Funds. These rely on the instruments that are directly linked to the prices of gold and invest in gold bullion. Returns are aligned with the price of gold.
Purpose: Someone who wants to invest in Gold in a paperless way.
Gold funds are especially beneficial at the time when there exists an uncertainty in equity markets. For instance, Jan 2008 witnessed a crash in equity markets. During that period, it was the gold mutual funds category that displayed the best performance. This is why gold funds have topped the return chart after a pause of 3 years.
So now if you are convinced enough that it is rewarding to be a die-hard fan of this precious yellow metal, then, go over and allocate your savings in gold funds to optimize your returns. To assist you in your decision-making in which Gold Funds you should invest, we would put some light on the top performing golf funds in India in 2017.
Best Gold Mutual Funds
Reliance Gold Savings Fund- Growth
AMC Name: Reliance Nippon Mutual Fund
Quarterly Average AUM-Assets under management as on 30-06-2017: ₹37.25 crore.
Net Assets on 30-06-2017: ₹69305.35 lakhs
Type: Open Ended
Investment Plan: Growth
Minimum Investment: ₹5000
NAV: ₹12.73
Expense Ratio: 0.7%
SIP Minimum Initial Investment: ₹1000
Entry Load: 0%
Exit Load: 2%
Portfolio Holdings:
Mutual Funds: Reliance ETF Gold BeES-99.91%
Money Market: CBLO-0.27%
Kotak Gold Fund – Growth
AMC Name: Kotak Mahindra Asset Management Company
Assets under management as on 30-06-2017: ₹169.65 cr
Net Assets on 30-06-2017: ₹16778.52 lakhs
Type: Open Ended
Investment Plan: Growth
Minimum Investment: ₹5000
NAV: ₹12.45
Expense Ratio: 0.7%
SIP Minimum Initial Investment: ₹1000
Entry Load: 0%
Exit Load: 2% on or before 6 months, 1% if redeemed after 6 months but before 1 years and Nil if redeemed after 1 year.
Portfolio Holdings:
Mutual Funds: Kotak Mahindra Mutual Funds: 98.67%%
Collateral Borrowing & Lending Obligation: 1.44%
Kotak Gold Fund – Dividend
AMC Name: Kotak Mahindra Asset Management Company
Quarterly Average AUM-Assets under management as on 30-06-2017: ₹12.18cr
Net Assets: ₹1218.39 lakhs
Type: Open Ended
Investment Plan: Dividend
Minimum Investment: ₹5000
NAV: ₹12.45
Expense Ratio: 0.7%
SIP Minimum Initial Investment: ₹1000
Entry Load: 0%
Exit Load: 2% on or before 6 months, 1% if redeemed after 6 months but before 1 years and Nil if redeemed after 1 year
Portfolio Holdings:
Mutual Funds: Kotak Mahindra Mutual Funds: 98.67%%
Collateral Borrowing & Lending Obligation: 1.44%
SBI Gold Fund – Growth
AMC Name: SBI Funds Management Limited
Quarterly Average AUM-Assets under management as on 30-06-2017: ₹385.68 crores
Net Assets: ₹38567.92 lakhs
Type: Open Ended
Investment Plan: Growth
Minimum Investment: ₹5000
NAV: ₹9.55
Expense Ratio: 0.43%
SIP Minimum Initial Investment: ₹1000
Entry Load: 0%
Exit Load: 1% for exit within 1 year of allotment and Nil if redeemed after 1 year
Portfolio Holdings:
SBI Gold Exchange Traded Scheme: 99.84%
Miscellaneous: 0.16%
Risks in Investing in Gold Funds
Fluctuations in Gold Prices
The demand and supply of gold all around the world affects gold prices. This causes many fluctuations in gold prices.
Just like other commodity producers, gold funds also face a high risk. This is mainly because the market price of gold is fluctuating and the price depends upon circumstances beyond the control of gold producers.
No Benefits of Taxation
Unlike equity funds, gold funds do not provide any tax benefits. Instead, taxes on long-term capital gains are taxable at 10% whereas short-term gains are taxable at slab rates applicable to the investor.
Concluding
Thus, it will be beneficial for investors to invest in gold funds only if they analyze the effects of investment therein. It would be better to make a portfolio of investments by consulting an investment professional.
Happy investing!
