What should be the percentage exposure to gold in one's portfolio? What is the difference between gold ETFs and gold funds and which is better of the two?
Kartik Kapoor
There is no thumb rule when it comes to investing in gold. Gold has been prominent over the last 2-3 years because of the market turbulence and global financial crisis. We believe that investors should look at gold as an opportunistic bet, not as a static allocation in their portfolio.
Coming to your second query, there isn't much of a difference between gold funds and gold ETFs. The underlying investment is the same in both. A gold fund invests in gold ETFs. Hence, it's just a convenience and cost trade-off. A gold fund costs a little more because you don't need to own a demat account to invest in it, which you need in the case of a gold ETF.
This article was originally published on April 23, 2012.
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