Gold ETF vs gold mutual fund: There's only one right choice!

Summary: Gold ETFs or gold mutual funds, which is the right way to invest in the yellow metal? We break down their advantages, disadvantages and key differences to help decide which option is right for you. Gold has carved a special place in the hearts of conservative investors. During the tough market conditions of the 2008 Global Financial Crisis, it fell much lower than equity and debt. Now, in this difficult market phase, this precious metal has proven its mettle once again. As of November 2024, it gunned out over 24 per cent. This unexpected rise has certain key drivers. One of these is that central banks all over the world are stockpiling the yellow metal at a quick pace. Simply because it acts as an excellent store of value amid the fluctuations of fiat currency. As a result, it has found renewed confidence among Indian investors. That's why we'll discuss the two routes for investing in this asset class: gold ETF and gold mutual fund. We'll run you through the basics of both investment types and how they are different. By the end, you'll have a clear idea of which one suits you best. Now, let's get started with the first one: gold ETF. What is a gold ETF? A gold exchange-traded fund (ETF) is a type of investment fund that directly tracks the price of physical gold. Each of its units represents one gram of gold bullion with 99.5 per cent purity. Since it is an ETF, it will trade on the stock exchange. So you'll need a demat account to invest in them. However, unlike most ETFs, there isn't a significant premium or discount to them as they can be created or cancelled. Suggested read: What is a gold ETF? Benefits of gold ETFs Lower expense ratio While gold ETFs vs gold mutual fu

This article was originally published on January 17, 2025.