Gold mutual funds don't require Demat accounts, as they invest in AMC gold ETFs. It allows investments in SIP, while gold ETFs do not. Gold funds have an exit charge if they are redeemed within a year, while gold ETFs don't. Buying and selling gold ETFs requires a Demat account.
Gold ETFs have lower management costs than gold mutual funds. Since gold MFs invest in gold ETFs, their expenses also include the expenses of gold ETFs. Gold exchange-traded funds (ETFs) invest in gold with a purity of 99.50%, while gold funds invest in gold ETFs. After analyzing all the main differences between gold investment funds and gold ETFs, if you are looking to make a regular investment rather than make a one-time investment, then a gold fund is a better and more rewarding option, at an additional cost.
Therefore, investors who want to track their gold investments in real time may consider investing in gold ETFs. A gold ETF unit is equivalent to 1 gram of gold and is backed by physical gold of very high purity (99.5 percent). Gold mutual funds can be purchased in mutual funds without a Demat account, but gold ETFs are traded on exchanges and require a Demat account. Gold ETFs and gold mutual funds are grouped investments managed by mutual fund houses and are designed to help investors invest in gold electronically.
This also works as a hedge against inflation, since you'll enjoy the benefits of owning gold without having real gold. In addition, investors who are unable to invest a high value in the purchase of physical gold can invest through gold funds. The minimum investment amount in gold mutual funds is 1000 INR (as a monthly SIP), while gold ETFs usually require 1 gram of gold as a minimum investment, which is close to 2,785 INR at current prices. Therefore, investors who want to invest in gold for profits or convert it into physical gold in the future may consider investing in gold ETFs.
They are managed by fund managers who monitor gold prices on a daily basis and trade with physical gold to optimize returns. Gold mutual funds do not invest directly in physical gold, but rather adopt the same position indirectly when investing in gold ETFs. You can invest in gold or another precious metal as an asset by purchasing physical gold or investing in it electronically (e.g., among all the gold investment options available in India, gold mutual funds and gold ETFs are considered a better option because they simplify the process of buying gold, thanks to greater liquidity and safer gold accumulation). This leaves us with gold ETFs and gold mutual funds as a comparable investment option to find out which one is better and why.
However, the way people invest in gold has changed over time, and people prefer digital gold to physical gold.