Gold Mutual Funds at the Top of the Priority Chart

20 Nov

Posted by Shyam as Mutual Funds

Even at these peaks investors are furious for buying gold. The lure for gold is increasing day by day, appealing our Indian investors. Few years back the only source for making investment in gold was either purchasing them in form of bars, coins and jewellery. However this form of investment incurs storage as well as insurance cost.

Besides these, it’s not easy to sell them off as and when you need them. With the passage of time Gold ETFs hit the market, investing in physical gold with 99.5% purity. Well some funds invest in gold mining companies abroad like, DSPBR World Gold and AIG World Gold. Some funds consider gold as an asset besides equity and debt.

Reliance Mutual Fund with the introduction of Reliance Gold Savings Fund opened opportunities and provided an ease of investing in gold. Reliance Gold Savings Funds is a Fund of Fund investing in Reliance Gold ETF. However this fund like other mutual funds attracts exit load if withdrawal is made with in first year of buying the units. A 2% exit load is imposed on investors. Besides these a recurring dual expense of 1.5% has to be paid by investor. 1% in Reliance Gold ETF and 0.5% in Reliance Gold Savings Fund and is considered as a cost of convenience while staying invested with the fund.

Benefits of staying invested with Reliance Gold Saving Fund

1) No compulsion on opening a demat account: Investors staying invested with Gold ETF need to open a demat account however with this fund there’s no need to do so. Investment can be made just like any other fund.

2) Liquidity: The fund provides liquidity as an investor can subscribe and redeem the units on all working days directly from the fund house. Whereas, Gold ETF lacks liquidity as purchase and sale takes place on exchange and is depended on it.

3) Cost effective: Demat account attracts expenses relating to brokerages, delivery charges, annual maintenance charges, account opening charges, etc. However no such expenses have be incurred by investor staying invested with the fund.

4) Tax: The fund has same tax structure to that of debt mutual fund schemes

5) Varied investment options: The fund provides ease if investing with various options like, SIP (with a minimum of Rs. 100), STP, SWP, auto switch and trigger facility which the ETF s does not provide.

6) Diversification: A minimum of 95% is invested in Reliance Gold ETF and the balance if any in money market instruments, short-term fixed deposits or schemes investing in liquid schemes or money market securities of either Reliance Mutual Fund or SEBI registered mutual fund.