5 Tips on investing in gold exchange traded funds

Gold needs no special introduction to us Indians. The value of this precious yellow metal is appreciated and respected in almost every Indian household. Gold has been an integral part of several Indian customs and traditions for many years now. Apart from honing a religious significance, gold also represents wealth and is often considered to be a status symbol as well. There is something about this yellow metal that makes it to the kitty of Indian households, either as an ornament or as an investment. Yes, gold has been a part of financial planning of Indian investors for a very long time now. Apart from flaunting it in the form of ornaments and jewellery at weddings and other occasions, gold is also bought in the form of biscuits, coins and even bricks simply for its investment quotient.

However, in the recent past, India is changing the way it buys gold, at least when it comes to investment. Gone are the old ways of purchasing gold in physical form. A lot of Indian investors are ditching the old idea and adopting the new way of buying gold in digital format. Retail investors are finding investing in gold via gold ETFs a smarter and easier option than buying gold in physical format.

If you too are keen on finding out what are gold ETFs and looking out for some tips before investing in digital gold, continue reading.


Tips for investing in gold exchange traded funds
If you are new to financial markets and looking out for some tips before considering an investment in gold exchange traded funds, here are a few pointers that might help:

1. If you plan on selling your gold ETF units, you will have to pay a commission or brokerage charges that may vary from fund house to fund house. So before investing in a gold ETF belonging to any AMC, make sure that the expense ratio for managing the gold ETF is considerably lower.
2. Check out for the gold ETF’s past performance and consider investing in a fund that has a proven track record. Remember that it is better to invest in a fund that has given consistent capital gains over the years rather than investing in a fund that has been the past year’s top performer.
3. Consider investing in gold ETFs rather than buying physical gold. Investing in digital gold makes a lot of sense because you do not have to worry about its authenticity. Plus, the safety of physical gold is always a concern. You need to store it in a bank’s safety vault, for which you may have to pay annual fees. You cannot keep gold in bulk at home because there is a constant fear of theft. Hence, if you have the budget of purchasing gold in bulk, buying it in the form of gold ETFs might be a decent idea.
4. Do keep a track on the rise and fall of gold prices on a daily basis. This way, when the gold prices go down, you can buy more units and benefit from rupee cost averaging. And when the prices go up, you might be able to sell your funds and score some profit. So make sure that you inculcate the habit of keeping a daily check on gold prices.
5. If you are investing in gold ETFs as an investment, do not limit your investments to them. Consider diversifying your portfolio with other investment products too. This way you will be able to give your investment portfolio the diversification it deserves.

These were some of the general tips every investor should keep in mind before investing in gold ETFs. And those who are completely new to investing and lack the knowledge of financial planning, do not shy away from seeking the help of a professional advisor. It is better to take assistance than making a hurried investment decision.

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.

This is an investor education and awareness initiative by Axis Mutual Fund. Investors have to complete one-time KYC process. Visit www.axismf.com or contact us on customerservice@axismf.com for more information. Investors should deal only with registered Mutual Funds, details of which are available on www.sebi.gov.in - Intermediaries/Market Infrastructure Institutions section. For any grievance redressal, investors can call us on 1800 221 322 or write us at customerservice@axismf.com or register complaint on SEBI Scores portal at https://scores.gov.in