Investing in gold never grows old. Is it the right time to invest in gold mutual funds?

Investing in gold never grows old. Is it the right time to invest in gold mutual funds?

Finance & Accounting

Nidhi mehra

Nidhi mehra

1 Aug 2020, 12:30 — 5 min read

Gold has always maintained its value since ancient times. This precious metal is considered to be against inflation and a haven asset during economic uncertainties. Now, global health pandemic has contributed to more difficulties in the global economy. With this, gold as an asset class is back into consideration for investment. Demand for gold is also reflecting on the price hike of the yellow metal. When we talk about investing in gold, gold mutual funds are one of the easiest, smart, and convenient options available today. 

So, what are gold mutual funds?

Gold mutual funds are the type of mutual funds that primarily hold gold as an underlying asset in the fund portfolio. Basically, pooled money by the mutual fund is invested into physical gold, gold exchange-traded funds, stocks of gold mining companies and gold producing and distributing syndicates. Gold mutual funds are a type of open-ended mutual fund that allows you to invest and redeem anytime. With various amazing benefits, gold mutual funds are good investment options during these uncertain economic situations.

What are the benefits of gold mutual funds?

Here are some fantastic gold mutual fund benefits –


Safety and security

Gold mutual funds in India invest directly or indirectly in securities that have gold as an underlying asset. As this eliminates the risk of holding the physical gold, gold mutual funds are considered safe. Gold mutual funds are also held in electronic form, and it gives a sense of security. 



Investing in gold mutual funds is exceptionally convenient as it allows investors to even start with a smaller amount. Your monthly investment into gold mutual funds can be as low as INR 500 through a systematic investment plan route. This makes it more convenient for the investor to start investing in gold in comparison to buying physical gold, which requires you to have a large sum for buying.



Investment experts and advisors always suggest not to put all eggs in one basket. Which means, diversification is the key to investment success. As gold has a low correlation with other asset classes, it helps in diversifying your investment portfolio. Specifically, if you consider gold mutual funds, they further diversify the portfolio by investing not just gold bullions but also into gold exchange-traded funds and stocks of gold mining companies. Diversification offered by gold mutual funds can help you get through the economic storms. With diversification, they reduce the overall risk of your portfolio, ultimately resulting in the steady growth of your savings.



Gold mutual funds in India are easy to buy and flexible. You can easily invest in gold mutual funds online, just like you invest in any other mutual funds. As gold mutual funds are open-ended mutual fund schemes, you can invest any time and redeem anytime.


Highly liquid 

The gold mutual fund benefits you by offering higher liquidity. You can redeem gold mutual funds anytime without any hassles and restrictions on the limit of redemption. This can be useful when you have to meet any emergency liquidity requirements.


Less volatile

The best part of gold as an asset class is it is comparatively less volatile and holds a low correlation with other asset classes. The gold mutual fund benefits you by reducing the volatility impact of equity investments. 

There is various best performing 
gold mutual fund in India to choose from. You can compare them based on their performances over the last few years. During economic uncertainties, gold mutual funds can perform well. Gold mutual funds can be an excellent way to secure and diversify your portfolio in these times of economic crisis. It is always important to consider your investment objective and risk profile while making any investment decisions.

Also Read: Make the 'Sahi' choice of Mutual Fund 


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Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views, official policy or position of GlobalLinker.


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