November 26, 2025
1 mins read
Understanding how each one works is often the deciding factor between investing in gold mutual funds and investing in gold exchange-traded funds, or ETFs. Gold ETFs are traded on the stock exchange, much like any other stock on the exchange. Therefore, investors can buy or sell units of the fund very easily, and they move or fluctuate in line with the prices, so they give investors the opportunity to stay in touch with real-time pricing. This can be more convenient for those who want some level of control over the investments.
Gold mutual funds, on the other hand, are managed by professionals. These funds mostly invest in gold ETFs, so they suit those who prefer a more relaxed, hands-off way to invest. Both options work well — it simply depends on one’s goals and comfort level with daily market activity.
Exchange-traded funds, or ETFs, provide investors with exposure to gold without requiring them to hold the metal in physical form. Each unit is exchanged on the exchange similarly to a share of stock and represents a modest amount of gold, usually one gram. Because of this, gold ETFs are a handy and safe way for investors to possess gold, because they can be bought and sold whenever they require liquidity.
Because gold ETFs track the price of gold, they offer a hedge against currency and inflation risk. Gold ETFs provide many investors with a convenient option to own gold in their portfolio without having to deal with the hassles of protecting and storing physical gold.
Understanding what makes gold ETFs appealing could help investors determine whether they are a fit and an appropriate gold investment for their strategy.
Lower costs: Trading costs and expenses are typically low, meaning total costs will be lower.
High liquidity: Investors can buy or sell ETFs at any point through the trading day with little effort.
Transparent: Prices reflect the market value of gold, so investors know exactly how an investment is behaving.
No storage hassle: Since the investment is electronic, there is no concern of storing actual gold.
Investors can access the gold market through gold mutual funds while not purchasing gold. These funds gather the funds of multiple investors and invest across gold ETFs or companies involved in mining or trading gold. Investors do not have to monitor pricing every day as these are professionally managed. SIPs can be offered, which let the investor invest a lesser amount over a longer timeframe, which helps ease new investors into the gold market. Gold funds are practical ways to stay linked to gold as an asset because they are redeemable and do not require storage.
Gold mutual funds also make it relatively easy and flexible to invest in gold.
Suitable for novice investors: Individuals can invest in small amounts of gold through SIPs or lump sum investments.
Professional management: Professional managers make all decisions, eliminating the need for continuous tracking and monitoring.
No physical gold: Since it’s all paper, you have no worries about purity or safety.
Liquidity: Your capacity to redeem units on business days permits rapid access to your money, whenever you need it.
Though both aim to give exposure to gold, they work differently.
Parameter | Gold ETFs | Gold Mutual Funds |
Exit Load | No exit load — investors can sell at any time without extra fees. | May have an exit load if sold within one year. |
Demat Account | Requires a Demat account to buy or sell ETF units. | No Demat account needed; investments go through fund houses. |
Investment Type | Direct investment in gold through the exchange. | Indirect investment through gold ETFs or gold-linked companies. |
Liquidity | Highly liquid, as units can be traded freely on exchanges. | Less liquid since sales depend on fund redemption. |
Minimum Investment | Usually equal to one gram of gold. | Typically starts at around ₹1,000, suitable for SIPs. |
Trading | Traded during market hours like shares. | Bought or redeemed through the fund house, not on exchanges. |
Gold ETFs: Directly correlated to gold prices and give elevated proximity to gold without any time hold.
Gold Funds: Indirect correlation, ultimately holding a collection of gold ETFs or legal instruments with gold holdings, wherein the fund manager makes all investment decisions.
Gold ETFs: Need a Demat account and basic knowledge of trading.
Gold Funds: Easily bought through a mutual fund platform — no need for a trading account.
Gold ETFs: Typically, the minimum investment is higher as it is determined based on grams of gold.
Gold Funds: Lots of easier small and regulated investments as an SIP and access across a more consistent adding contribution, no matter the contributions.
Liquidity and Flexibility
Gold ETFs: Easier to buy or sell during the trading day.
Gold Funds: Redeemed only once based on NAV, therefore, it is seen better for a long-term holding period.
Additional Read: Difference Between Gold ETFs vs Physical Gold
There isn't just one solution; each has advantages.
Cost-effectiveness: Gold ETFs frequently have lower costs, which can enhance long-term profits.
Liquidity: While mutual funds settle at day-end values, exchange-traded funds (ETFs) can be exchanged quickly on stock exchanges.
Management Style: ETFs directly track gold prices, whereas mutual funds rely on specialist knowledge that may be helpful in shifting markets.
Flexibility: Mutual funds are appropriate for people who want regularity and expert management, but exchange-traded funds (ETFs) provide smaller, more frequent trades.
Gold ETFs and gold mutual funds are both good options for adding gold to a portfolio. Ultimately, an investor will value either control or simplicity more. Gold ETFs come with the benefits of flexibility and being able to trade in real time, while gold mutual funds take away the need to actively manage things. An investor can use platforms like Bajaj Broking to evaluate and find ways to decide what investment option will work best for them based on their financial objectives and comfort level with these products.
No result found
A gold fund is a mutual fund that invests primarily in gold-related assets, including gold ETFs and physical gold. It aims for capital appreciation based on gold price movements, allowing investors to gain exposure to gold without owning it directly. Understanding the gold funds vs gold ETF comparison is vital for informed investing.
Gold ETF refers to an exchange-traded fund that tracks the price of gold. These funds are traded on stock exchanges, offering investors liquidity and ease of access. By investing in a gold ETF, individuals can gain exposure to gold's price fluctuations without physically owning the metal.
Gold funds generate returns primarily through capital appreciation and dividends from their underlying gold assets, while gold ETFs track gold prices directly. Both investment types allow exposure to gold, but the method of return generation differs, making gold funds vs gold ETF an important consideration for investors.
Gold mutual funds often incur higher management fees compared to gold ETFs, which usually have lower expense ratios. Gold ETFs also tend to avoid exit loads, making them more cost-effective in the long run. Evaluating costs is essential in the gold funds vs gold ETF discussion.
Gold funds may be perceived as safer due to their professional management and diversified portfolios, which can mitigate risk. However, the safety of both investment types ultimately depends on individual fund strategies and market conditions. Understanding the gold funds vs gold ETF landscape is essential for risk assessment.
Investing in gold funds typically involves choosing a mutual fund from a registered asset management company. In contrast, investing in gold ETFs requires a Demat account for trading on stock exchanges. Familiarity with the investment process helps investors navigate the gold funds vs gold ETF landscape effectively.
Most Gold ETFs in India are designed so that one unit is equivalent to 1 gram of gold. However, some may represent fractions depending on the fund structure. Always check the fund's scheme document for accurate unit-to-gram mapping.
Gold ETFs are not entirely risk-free. While they eliminate risks related to physical storage, they are still subject to market fluctuations, tracking errors, and fund management charges. Like any investment, they carry a certain level of financial and market risk.
Disclaimer :
The information on this website is provided on "AS IS" basis. Bajaj Broking (BFSL) does not warrant the accuracy of the information given herein, either expressly or impliedly, for any particular purpose and expressly disclaims any warranties of merchantability or suitability for any particular purpose. While BFSL strives to ensure accuracy, it does not guarantee the completeness, reliability, or timeliness of the information. Users are advised to independently verify details and stay updated with any changes. The securities are quoted as an example and not as a recommendation. Past performance is not necessarily a guide to future performance.
The information provided on this website is for general informational purposes only and is subject to change without prior notice. BFSL shall not be responsible for any consequences arising from reliance on the information provided herein and shall not be held responsible for all or any actions that may subsequently result in any loss, damage and or liability. Interest rates, fees, and charges etc., are revised from time to time, for the latest details please refer to our Pricing page.
Neither the information, nor any opinion contained in this website constitutes a solicitation or offer by BFSL or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service.
BFSL is acting as distributor for non-broking products/ services such as IPO, Mutual Fund, Insurance, PMS, and NPS. These are not Exchange Traded Products. For more details on risk factors, terms and conditions please read the sales brochure carefully before investing.
Investments in the securities market are subject to market risk, read all related documents carefully before investing. This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.
For more disclaimer, check here : https://www.bajajbroking.in/disclaimer
Level up your stock market experience: Download the Bajaj Broking App for effortless investing and trading
Open Your Free Demat Account
Enjoy low brokerage on delivery trades
|
Please Enter Mobile Number
Open Your Free Demat Account
Enjoy low brokerage on delivery trades
|
