Kolkata: Due to the surging prices of gold which is projected to continue through 2024, gold is always the center of focus. There are two common ways of investing in gold, which include, Gold ETFs and gold mutual funds and these investing methods take a lot of investors by surprise. There are also differences that can merit the use for ETFs and gold mutual funds. Each gold exchange traded fund (ETF) have a single unit of gold that they manage. ETFs are usually compared to mutual funds and it is true with some aspects. However, ETFs are open to trade on stock markets unlike mutual funds. So, to invest in an ETF one must have a demat account.

They call gold mutual funds gold funds. Open-ended gold ETFs are types of mutual funds that invest in gold. The aim of these funds is to invest only in gold of 99.5% purity. This is also the reason why gold mutual funds can only invest in gold ETFs. Both mutual funds and ETFs earn money by investing in the gold market. There is, however, a need for investors to note the differences between these two instruments to avoid confusion.

Between gold ETFs and gold mutual funds, which option is more beneficial?

To be certain, there are some similarities between gold ETFs and gold funds. Both make it possible for an investor to benefit from movements in the cost of gold without having to physically retain the metal or ornaments. Nevertheless, there are some critical differences in areas such as expense ratios, liquidity, and trading. Investing in gold mutual funds does not require a demat account. Gold ETFs, on the other hand, can be traded electronically on shares and stocks exchanges, allowing for real-time trading and investment profits. An excellent feature of gold ETFs is that they are very portable. All expenses associated with gold ETFs are a very low due to the absence of maintenance and other costs related to gold storage and management.

Gold ETF and Gold Mutual Fund investors: Who are admirers?

For an investor daring enough to explore new regions beyond the usual stocks and mutual funds, ETF gold have a potential flag. They pose little risk because they are based on compliances with gold which has at least a purity of 99.5%. Therefore even slightly risk avoiding investors can confidently invest in gold ETFs. There is also the advantage of monitoring gold prices online. Gold ETFs have yet another advantage — some of them m Sell higher and allow their customers to buy back ETFs which are redeemable for real gold.

But in a similar manner, gold funds can also be availed by people who wish to have SIPs since they are a classification of mutual funds. This is emerging as the most popular format of investment for countless Indians, especially little investors. Further, gold funds do not require demat accounts which a normal individual needs to possess. Since these are SIPs, market timing is not an issue that an investor would be concerned with.