The gold puzzle

Using the mutual fund route, you can invest in gold through a gold fund (which is essentially a fund of fund, or FoF) or through a gold exchange-traded fund (ETF). All gold ETFs simply buy and hold gold and hence are supposed to deliver broadly similar returns as gold itself. Gold funds buy and hold gold ETFs and hence are also expected to merely follow the returns of gold. However, our analysis of gold FoFs reveals extreme variation in their returns, with the best fund (Invesco India Gold Fund) delivering 4 per cent and the worst (IDBI Gold Fund) giving about -3 per cent over the past year. Gold FoFs