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Different Gold Funds

There are three different types of gold funds that you can invest in. Choose what suits you best…

Please provide some information about top gold funds and whether they are worth investing in.
-Abhilash Pancholi

There are different types of gold funds and you may choose the option that suits you best.

Gold mining funds
AIG World Gold and DSPBR World Gold Fund are funds that invest in stocks of gold mining companies across the globe. The fortunes of these funds are linked to the price of physical gold as well as the profits that these companies generate.

ETFs
Gold Exchange Traded Funds (ETFs) are referred to as paper gold. It is the closest substitute you can get to buying a gold bar. To invest in an ETF, you will need to have a demat account, wherein you can directly buy gold units from the stock exchange. These units are backed by gold. So the advantage of investing in a Gold ETF is that the underlying asset is physical gold with 99.5 per cent purity. This leaves little to compare among Gold ETFs other than the expense ratio of each of the funds.

Gold funds
If you do not wish to open a demat account, you can invest through a gold fund of fund (FoF). Such a fund just invests in the open-ended Gold ETF with the advantage of not needing a demat account. Do check the costs; they tend to be higher than that of a Gold ETF.



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