Gold mutual funds have become a popular choice for investors aiming to diversify and protect their portfolios. In 2023, gold mutual funds in India saw a notable growth rate of 15%, with the total assets under management (AUM) surpassing ₹20,000 crores.
This surge in interest reflects gold’s role as a hedge against inflation and market volatility, especially as global uncertainties continue to drive demand for safe-haven assets. Investing in gold mutual funds offers a convenient alternative to physical gold, with advantages like no storage costs, high liquidity, and digital accessibility.
For investors looking to optimise their portfolios, here are the Top 5 Gold Mutual Funds to Invest in 2024 that stand out for performance and growth potential.
What Are Gold Mutual Funds?
Gold mutual funds are investment options that focus on gold-related assets. These can include physical gold, like bars and coins, as well as investments in gold mining companies and gold exchange-traded funds (ETFs). In India, many of these funds operate as fund of funds (FoF), meaning they primarily invest in other gold-focused mutual funds or ETFs instead of holding physical gold directly.
Investing in gold mutual funds allows you to benefit from the value of gold without the need to buy and store it yourself. This can be a great way to protect your investments against inflation and add variety to your overall portfolio. Since the value of gold mutual funds is directly linked to gold prices, any changes in gold’s market value will affect the fund’s performance.
Overall, gold mutual funds can be a convenient and effective way to invest in gold, making it a popular choice for many investors looking to diversify their assets
Top Gold Mutual Funds in India 2024
| Fund Name | AUM (₹ in crores) | CAGR 3Y (%) | CAGR 5Y (%) |
| SBI Gold Fund | 1,814.52 | 13.99 | 15.47 |
| Kotak Gold Fund | 1,864.33 | 13.56 | 15.46 |
| Axis Gold Fund | 482.6 | 13.95 | 15.43 |
| HDFC Gold Fund | 2,041.53 | 13.81 | 15.3 |
| Invesco India Gold ETF Fund of Fund | 74.1 | 13.72 | 15.14 |
How Are Gold Funds Different from Gold ETFs?
Gold Funds and Gold ETFs are two popular options for investing in gold, but they have several important differences. Here’s a comparison:
| Feature | Gold Fund | Gold ETF |
| Investment Type | Mutual funds | Exchange-traded fund (ETF) |
| Structure | Open-ended | Closed-ended |
| Tracking | Follows the price of gold | Follows the price of gold |
| Expense Ratio | Generally higher | Generally lower |
| Liquidity | Less liquid | More liquid |
| Investment Horizon | Best for long-term | Suitable for short-term or long-term |
| Tax Implications | Capital gains tax applies | Capital gains tax applies |
| Minimum Investment Amount | Typically lower | Usually higher |
| Suitability | Good for those seeking diversification and who can handle market fluctuations | Ideal for those wanting a low-cost, liquid option that mirrors gold prices |
In summary, Gold Funds are often more suitable for long-term investors looking for diversification, while Gold ETFs appeal to those seeking a cost-effective, easily tradable option that closely tracks gold prices.
Benefits of SIP in Gold Mutual Funds
Investing in gold mutual funds in India has several advantages:
- No Storage Costs: Unlike physical gold, which needs secure storage, investments in gold funds are stored digitally in your investment or Demat account, eliminating storage fees.
- Lower Acquisition Costs: When purchasing physical gold, you often incur extra charges like making fees, customs duties, and GST. These costs are generally not applicable to gold mutual funds.
- High Liquidity: You can easily buy and redeem units of gold funds from the Asset Management Company (AMC) or through the stock market, offering flexibility and quick access to your money.
- No Purity Concerns: Gold mutual funds take away worries about purity because the AMC ensures the gold backing the fund is of high quality. This makes gold funds a convenient and hassle-free choice for investors.
Conclusion
Gold mutual funds provide an easy entry into gold investments, helping you safeguard against market volatility while enhancing portfolio diversification. As market demand for gold remains strong, these funds are poised to offer stable returns with flexibility and lower costs than physical gold. Whether you’re a seasoned investor or a beginner, investing in these top gold funds can be a wise choice in 2024.
Frequently Asked Question
What are the advantages of investing in gold mutual funds in 2024?
Investing in gold mutual funds offers benefits like no storage costs, high liquidity, and digital ownership, making it a hassle-free alternative to physical gold investments.
How does a gold mutual fund differ from physical gold?
Gold mutual funds are digitally stored, removing the need for secure physical storage and associated costs, while physical gold may incur additional charges like making fees and GST.
Can I start a Systematic Investment Plan (SIP) in gold mutual funds?
Yes, most gold mutual funds offer SIP Investment options, allowing you to invest small amounts regularly and benefit from rupee cost averaging.
Suggested Read – Best Index Mutual Funds to invest in 2024
