Gold ETFs And FoFs

While Indians love to invest in physical gold, even mutual funds offer the option, but in paper format.

- Tarun Bhardwaj

In India, gold funds are, typically, of two types-gold exchange-traded funds (ETFs) and gold fund of funds (FoFs). Gold ETFs track the price of gold and are backed by actual gold bullion, while gold FoFs invest in gold ETFs. A third type is World Gold FoF. It invests in stocks of companies involved in gold mining and production.

While you need a demat account to invest in gold ETFs, the other two options can be bought through fund houses directly.

TYPES OF GOLD FUNDS

Gold ETFs: These track the price of physical gold, which is the underlying asset. The concept of gold ETFs was first introduced in India by Benchmark Asset Management Co.