In the detailed video “Gold ETFs vs Gold Funds: Which option is better?”, ET Money Hindi breaks down the differences between Gold Exchange Traded Funds (ETFs) and Gold Mutual Funds.
Gold has always been a popular investment in India. But today, smart investors look beyond physical gold and consider modern, transparent, and cost-effective ways to invest—like Gold ETFs and Gold Funds.
If you’re confused between the two, this guide will help you make an informed decision.
1. What are Gold ETFs?
✅ Definition: Gold ETFs are exchange-traded funds that invest in physical gold (99.5% purity). Each unit represents approximately 1 gram of gold (varies by AMC).
✅ How it works:
- You buy/sell units on the stock exchange like shares.
- Price tracks real-time gold prices.
- Needs demat and trading account.
✅ Advantages:
- Very low expense ratio (often ~0.5–1%).
- Transparent pricing linked to live gold rates.
- Easy to buy/sell any time markets are open.
✅ Who should invest:
- Investors comfortable with Demat accounts.
- Those who want low-cost, direct exposure to gold prices.
2. What are Gold Mutual Funds?
✅ Definition: Gold Mutual Funds invest primarily in Gold ETFs.
✅ How it works:
- Investors buy into the mutual fund.
- The fund manager invests in underlying Gold ETFs.
- No need for a demat account.
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✅ Advantages:
- Very easy for beginners.
- Can invest via SIP with as little as ₹100.
- No demat or trading account needed.
✅ Who should invest:
- New investors without Demat accounts.
- Those looking for simple, paperless SIP investing.
✅ Drawback:
- Slightly higher expense ratios (often ~0.8–1.5%) due to management costs over ETF costs.
3. Key Differences Between Gold ETFs and Gold Funds
| Feature | Gold ETF | Gold Mutual Fund |
| Platform | Stock Exchange | Mutual Fund House |
| Account Required | Demat & Trading | None |
| Pricing | Real-time | NAV, end of day |
| Liquidity | Market hours | Fund redemption timelines |
| Cost | Lower expense ratio | Slightly higher expenses |
| Minimum Investment | 1 unit (~1 gram) | ₹100 SIP possible |
✅ ET Money’s expert verdict:
- Gold ETFs are better for experienced investors who want lowest costs and already have Demat accounts.
- Gold Mutual Funds are better for beginners who want easy, accessible investing without extra accounts.
Final Takeaway
ET Money Hindi’s analysis makes it clear:
- Gold ETFs are best for experienced investors who want low cost, real-time pricing, and already use a demat account.
- Gold Mutual Funds are better for beginners looking for easy, paperless, SIP-friendly investing without extra accounts.
Either option is far better than buying physical gold in terms of safety, transparency, and convenience.
If you’re serious about building a balanced portfolio with gold, understand your needs and pick the right route.
For more in-depth guides, mutual fund reviews, and wealth-building strategies, visit Investment Marg. For broader personal finance, tech, and career insights, check out InkSpireDaily.
FAQs:
Q1. Do I need a demat account for Gold Mutual Funds?
No. You only need a mutual fund account or app. That’s why it’s great for new investors.
Q2. Which is cheaper—Gold ETF or Gold Fund?
Gold ETFs usually have lower expense ratios. Gold Mutual Funds have slightly higher costs because they invest in ETFs plus fund management fees.
Q3. Can I do SIP in Gold ETFs?
Directly no. But you can set up monthly purchases manually via your broker. For true SIP automation, Gold Mutual Funds are better.
Q4. Is there any difference in gold quality?
No. Both are backed by 99.5% purity gold as per SEBI rules.
Q5. Which is better for long-term investing?
Both can work well. Choose based on convenience, costs, and whether you have a Demat account.
Credits to: etmoneyhindi
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