Introduction

Investments aren’t restricted to stocks, bonds, real estate, gold, etc. Instead, a new and secure way to invest in gold and related financial instruments, such as exchange-traded funds or a gold mining company’s share. The common structure followed for operating in gold and gold-related mutual funds in India is a fund of fund structure (FoF).

Gold mutual funds offer investors an opportunity to invest in gold without actually purchasing or storing gold physically. Whether it is a hedge against inflation or portfolio diversification, these funds offer multiple benefits. A gold mutual fund’s performance is directly proportional to gold’s price movements in the market.

Read on to learn more about the benefits of gold mutual funds, tips to choose good gold mutual funds, and the best gold mutual funds of 2024.

Why Choose Gold Mutual Funds?

Gold mutual funds offer the following benefits to investors.

• The cost of acquiring gold mutual funds eliminates common costs such as making charges, customs duty, or GST applicable to physical gold.
• Since gold mutual funds will be directly deposited in your demat account, they are more secure and safe to store.
• They offer high liquidity since they can be readily redeemed on the stock market.
• It also eliminates any purity concerns commonly associated with purchasing physical gold.

Considerations for Investors

While choosing gold mutual funds, here are some factors to consider.

• A good and reliable gold mutual fund has a consistent track record for at least five years.
• The experience and qualifications of the fund managers matter and influence the fund’s performance.
• The gold mutual fund’s investment portfolio must be well-diversified.
• Understand the fund’s investment objectives to ensure it aligns with yours.

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Best Gold Mutual Funds for 2024

Here are some of the best gold mutual funds for investors in 2024.

SBI Gold Fund

This fund, managed by SBI Mutual Fund, predominantly focuses on investments in gold and related securities. With a Compound Annual Growth Rate (CAGR) of 15.47% and 13.99% over the past five and three years, respectively, it is one of the leading gold mutual funds. This fund’s Assets Under Management are worth ₹1,814.52 crores, with a volatility ratio of 10.85% and expense ratio of 0.10%.

Kotak Gold Fund

Helmed by Kotak Mahindra Asset Management, this fund, geared at investments in gold and its related instruments, is one of India's best gold mutual funds. With a CAGR of 15.46% and 13.56% for the past five and three years, its AUM is valued at ₹1,864.33 crores. This fund’s volatility and expense ratios are 10.33% and 0.17%, respectively.

HDFC Gold Fund

Another excellent choice for anyone interested in investing in gold and gold-related instruments is the HDFC Gold Fund. Managed by HDFC Asset Management, this fund’s AUM is worth ₹2,041.53 crores and has a CAGR of 15.30% and 13.81% for the past five and three years, respectively. HDFC’s Gold Fund’s volatility ratio is 10.29%, and its expense ratio is 0.18%.

Axis Gold Fund

This fund, managed by Axis Asset Management, is perfect for anyone interested in investing in gold and related securities. With an AUM of ₹482.60 crores and CAGRs of 15.43% and 13.95% for five and three years, respectively, it’s one of the leading gold funds in India. Its volatility and expense ratios are 10.33% and 0.17%, respectively.

ICICI Prudential Regular Gold Savings Fund

This gold mutual fund, managed by ICICI Prudential Asset Management, has an AUM of ₹965.80 crores. With CAGRs of 15.10% and 13.90% for five and three years, respectively, it’s a leading gold mutual fund for investing in gold and gold-related securities. ICICI Prudential Regular Gold Savings Fund’s expense and volatility ratios are 0.09% and 11.20%, respectively.

Conclusion

Investing in gold mutual funds can be beneficial whether you want to diversify your investment portfolio or hedge against risks. However, before making any investment decision, carefully consider your risk tolerance, expense ratios, investment strategy, fund performance, and investment goals.

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