How to Invest in the Gold through Mutual Funds - Motilal Oswal

Can You Invest in Gold Through a Mutual Fund

Through the throes of the pandemic, the economy has become an uncertain place for the best of us. Inflation is literally hitting sky-high proportions, and with bank interest rates at all-time lows, where does the investor go? There’s one asset whose shine never seems to fade, although it may lose a bit of its lustre now and then. This asset is gold. Several investors of the digital age view gold as the most assured hedge against unpredictable circumstances. Moreover, with the highest degree of liquidity in investment avenues today, gold is the go-to investment channel. Gold funds are a good way to allocate your wealth and they provide security as you are investing in gold other than in physical form. 

Gold, A Great Buy

In 2020, at the height of the pandemic, somewhere in August, the prices of gold reached record highs amounting to ₹56,000 for 10 grams. The prices have fallen since then, but experts believe that the majority of investors still think that gold is a good buy. A number of ways to invest in gold exist today, and these are far from the regular physical form that most Indians are used to. Mutual funds provide a variety of ways to make investments in gold. Mutual fund investment in paper gold offers numerous benefits such that investors do not have to bear any fees for making or a premium. Additionally, investors need not worry about storage, purity, and gold insurance issues. It’s worthwhile to do a recce on the route of gold investment via mutual funds. By way of versatile online investment, you can invest in gold mutual funds in any of four ways. 

Gold ETFs 

Gold exchange-traded funds are listed on exchanges and you can invest in physical forms of gold. Every single unit of a Gold ETF is actually equal to 1/2 a gram of 24 carat solid gold. Gold exchange traded funds provide abundant liquidity as these may be sold anytime on exchanges anywhere. ETFs of gold are traded on exchanges at existing market prices of gold in physical form. Hence, investors can purchase or sell assets at close to market prices, without having to pay premiums on purchases, or sales at discounts. 

Gold Funds

A gold fund is a mutual fund scheme that is open-ended. The investment is done in units of ETFs of gold. This gold investment does not require you to open a demat account. An investor can simply invest and make redemptions out of gold funds like any other given mutual fund. Every gold ETF, or gold fund has yielded above 30% of returns in the last few years.

International Gold Funds

You may have the availability of a small amount of international gold funds to invest in. These investment funds invest in units of gold funds abroad. Mutual fund investors are of the opinion that international funds are highly risky and are not a match for the retail investor category. Nonetheless, those who can grasp trends in international markets can make investments in them.

Multi-Asset Allocation Fund

A fund of the multi-asset allocation kind falls in the category of hybrid mutual funds. In such a mutual fund, a minimum of 10% of portfolio investment constitutes at least three classes of assets. The majority of such funds afford allocation to gold. Nonetheless, mutual fund managers and advisors feel that investors cannot trace portfolio allocations to gold in multi-asset allocation funds. Analysts state that investors should rather choose to invest in better options to invest in gold.

Gold Investment With MO

Investment in gold never lets you down. Professionals state that gold investment should be at least worth 20% of any portfolio, offering a healthy diversification of funds. At MO, or Motilal Oswal, you can find gold investment options to yield assured gains in your portfolio.

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