Akshaya Tritiya is considered an auspicious time for investing in Gold. India has a long-lasting relationship with Gold due to its ability to uphold its intrinsic value over the long term. However, it’s about time that people reconsider buying physical Gold such as Gold coins or jewellery. This Akshaya Tritiya, explore the relevance of Gold ETFs as a valid investment avenue and portfolio diversifier.
What are Gold ETFs?
Gold ETF is an exchange-traded fund (ETF) can be bought and sold easily like a company stock. Gold ETFs are passive investment vehicles that track Gold prices. They are backed by physical Gold. They offer investors exposure to the Gold market using small denominations that are easy on the wallet.
What are Gold Mutual Funds?
Gold Mutual Funds are essentially Fund of Funds scheme with underlying investment in Gold ETFs. They offer investors the flexibility of investing through an SIP thereby helping you maintain a strategic allocation to Gold.
How does Gold ETFs and Gold Mutual Funds trump physical Gold?
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Backed by physical Gold of 99.5% purity or above
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Transparent & Real-time prices linked to international Gold price
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No lock-in can be liquidated easily
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Traded on the NSE & BSE like a company stock
Additionally, investing in Gold ETFs or Gold mutual funds does not require you to pay for locker or storage charges. Also, GST credit is offset when redeeming from Gold ETFs at the scheme level.
Gold as a strategic portfolio diversifier
Gold and stock markets generally share an inverse relationship. Instead of tactically investing in Gold ETFs every time the equity markets are going through rough patches, it’s time to invest in Gold as part of your asset allocation from a long term and strategic point of view. At any point, investors can allocate upto 20% as part of their diversified portfolio.
Why is it the right time to invest in Gold?
Gold shines during periods of macroeconomic uncertainty and helps cope with inflation better. This is because inflation can lead to devaluation of currencies. However, Gold prices generally increase in line with the rate of inflation. This was obvious during the recent banking crisis or when the governance of a major listed company was in question. A slowing economy and sticky inflation are conducive for Gold.
Therefore, Gold ETFs or mutual funds is an ideal investment for investors who want to avoid the storage hassles and pricing markups associated with physical Gold. This Akshaya Tritiya, use the opportunity to invest smart using Gold digitally.
Disclaimer, Statutory Details & Risk Factors:
The views expressed here in this article / video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments.
Mutual fund investments are subject to market risks read all scheme related documents carefully.