Best Gold Mutual Funds to invest in 2024

Gold has long been considered a safe option for investment, valued for its ability to retain its worth over time. It has also proven to be a reliable asset for protecting investments during periods of market volatility, when it moves in the opposite direction of equities. Investing in gold can take various forms, from physical assets like Coins, Bars and jewellery to Digital Gold, Gold Mutual Funds, ETFs and Government Bonds. These diverse investment options allow you to invest in gold without the need to own the metal physically. However, when considering investments in Mutual Funds, regardless of the avenue you choose, caution is paramount.

In this blog, we've compiled a list of the Best Gold Mutual Funds in India for the year 2024. Investing in these top Gold Mutual Funds can be advantageous for investors who wish to gain exposure to gold without the need to possess the physical metal. Let's explore the world of Gold Mutual Funds and explore the options available.

Understanding Gold Mutual Funds

Gold Mutual Funds are a category of investment funds that hold assets related to gold. These funds can comprise of various instruments directly linked to gold prices, such as physical gold, gold mining company stocks and more. By investing in Gold Mutual Funds, you gain exposure to the price movements of gold, without the need to own the physical metal. It offers a convenient and paperless way to invest in gold

Top 5 Gold Mutual Funds in India for 2024

Here are the top-performing Gold Mutual Funds in India for the year 2024:

1. ICICI Prudential Regular Gold Savings (FOF) Direct-Growth:

Fund Category: Other Mutual Fund Scheme

Objective: Generate returns by investing in units of ICICI Prudential Gold ETF.

2. Axis Gold Direct Plan-Growth:

Fund Category: Other Mutual Fund Scheme

Objective: Generate returns that closely correspond to those generated by Axis Gold ETF.

3. Kotak Gold Fund Direct-Growth:

Fund Category: Other Mutual Fund Scheme

Objective: Generate returns by investing in units of Kotak Gold Exchange Traded Fund.

4. SBI Gold Direct Plan-Growth:

Fund Category: Open-ended scheme

Objective: Provide returns closely aligned with those provided by SBI Gold ETF, while also allocating a portion to short-term debt securities.

Factors to consider before investing in Gold Mutual Funds

Before you venture into Mutual Fund investments in gold, there are several crucial factors to keep in mind:

1. Fluctuations in Gold Prices:

Gold prices are subject to fluctuations influenced by global demand and supply. Market risk and price volatility, similar to other investment options, affect gold funds. While short-term market conditions may introduce volatility, gold investments tend to balance out over the long term.

2. No Physical Gold Ownership:

Gold funds offer a way to remain invested in gold without owning physical gold. If you prefer not to possess physical gold but still want exposure to the commodity, Gold Mutual Funds, Digital Gold, Gold ETFs and Gold Bonds can be beneficial.

3. Taxation on Gold ETFs:

Taxation on long-term capital gains from gold ETFs is applicable at a rate of 20% plus cess with indexation benefits. Short-term gains are taxed based on the investor's income tax slab. Investments held for more than three years qualify as long-term.

4. Taxation on Gold FoF:

Fund-of-Fund (FoF) investments, including gold FoF, are treated as non-equity funds for taxation purposes. Short-term Capital Gains (STCG), withdrawals within three years, are added to the taxable income and taxed according to the investor's income tax slab. Long-term Capital Gains (LTCG) withdrawal after three years with indexation benefits are taxed at a rate of 20%.

Monitoring your Gold Mutual Fund Investments

Once you've invested in Gold Mutual Funds, it's crucial to keep a vigilant eye on your portfolio. Here are some tips for monitoring your Gold Mutual Fund investments effectively:

1. Regular Portfolio Review: Periodically review your Gold Mutual Fund holdings to assess their performance. While gold is generally considered a stable asset, economic conditions can impact its value. Keep an eye on market trends and global events that may influence gold prices.

2. Diversification: Consider diversifying your investment portfolio by allocating a portion to Gold Mutual Funds. Diversification helps spread risk and reduces the impact of volatility in any single asset class.

3. Set Clear Investment Goals: Define your investment objectives and time horizon. Are you investing in gold to hedge against inflation, as a long-term investment or as a short-term asset? Understanding your goals will help you make informed decisions.

4. Stay informed: Stay informed about changes in taxation policies and regulations that may affect your Gold Mutual Fund investments. Be aware of the tax implications of your investment choices.

5. Consult Financial Experts: Consider seeking advice from financial experts or advisors who can provide insights into market conditions and help you make well-informed investment decisions.

6. Rebalancing: Periodically assess your overall investment portfolio and rebalance if necessary. Rebalancing ensures that your asset allocation aligns with your risk tolerance and investment goals.

7. Long-term Perspective: Keep in mind that Gold Mutual Funds, like gold itself, are often viewed as long-term investments. Short-term fluctuations are common, but a patient, long-term perspective can help you ride out market volatility.

Gold Mutual Funds offer investors a convenient and efficient way to gain exposure to the precious metal, without the need for physical ownership. The Best Gold Mutual Funds in India for 2024 present opportunities for capital appreciation and portfolio diversification. Investing in gold can be a strategic move to safeguard your investments during uncertain economic times.

As you consider investing in Gold Mutual Funds, it's essential to keep in mind the fluctuating nature of gold prices, the benefits of paperless ownership and the taxation implications. Whether you choose ICICI Prudential Gold, Axis Gold, Kotak Gold or SBI Gold, conducting thorough research and aligning your investments with your financial goals are crucial.

Gold Mutual Funds offer a flexible and reliable means of investing in this precious metal. Your choice should reflect your investment objectives and risk tolerance. As with any investment, a diversified portfolio and a long-term perspective can help you make the most of your Gold Mutual Fund investments in 2024.