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Gold with Demat

A fund of fund that invests in Gold ETFs would be convenient for investors who don’t have a demat account…

I have come across three gold fund of fund offers, in which we don’t need to open a demat account to invest. What should be my investment strategy?
Amit Chaudhary

Reliance Mutual Fund, Kotak Mutual Fund and now SBI Mutual Fund have gold funds that are not exchange traded funds (ETFs), but are fund of funds (FoFs) that invest in Gold ETFs. This route is convenient for all those investors who do not have a demat account and want to invest in a Gold ETF because one has to have a demat account to invest in ETFs.
Such funds are passively managed in the sense that they invest in their respective open-ended Gold ETFs, which in turn invests in physical gold with 99.5 per cent purity. It is because of such a structure that the fund is able to offer the convenient systematic investment route to investors.
Investing in gold should be considered only once you have a well diversified equity portfolio and are looking to invest in gold as a hedge. Do not exceed your exposure to gold to more than 5-10 per cent of your portfolio. You can pick the fund with the least expense ratio.

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