Gold Mutual Funds
Gold mutual funds are a very good investment in any investment portfolio, because as the markets go down, the gold price will rise. So it will be used for protection against any downside risk in the portfolio.
Morningstar, a leading mutual fund rating and research company has defined “Precious metals mutual funds” as “the funds that invest primarily in equities and securities of the companies which are primarily engaged in mining, distribution and processing of precious metals”. Gold mutual funds are also classified in the same category.
The price movement of gold mutual funds can increase the profit percentage of the funds dramatically. The expenses occurred by the gold mining costs to mine a ounce of gold are fixed costs which will not vary dramatically. So a small percentage increase in the gold price will increase the profitability of gold mutual funds and vice versa. For this reason, the price of the mutual funds doubles than the price change of the gold itself. In case of situations when the markets fall drastically, the prices of the gold mutual funds fall down, because in these situations every stocks fall down. Gold mutual funds form a best balance of leverage of an investors risk profile.
Buying the other forms of gold has its own disadvantages. For example if you buy gold bars or coins, the safety of the gold is a big concern. You have to protest the gold from being stolen. In case of keeping it safely in bank lockers, it also costs as well as you have to check the security of the bank physically and financially. In case of jewelry form, you cannot sell it immediately to raise cash. You can sell gold bars or coins quickly to raise money, but you cannot sell the jewelry quickly. Also selling the jewelry will be done at a reduced price than the market price, because of the usage as well as the other costs involved to reuse it.
Another alternative is to invest in gold is gold exchange traded funds. These funds trade in stocks whose movements are related to the price of gold at any point of time. These funds can be bought and sold at any times during market hours. Gold exchange traded funds either own their own gold bullion (bars and coins) and the others may own gold futures contracts and some may own both. The funds which invest in gold bullion will track the gold prices very close than others those invest in futures contracts.
Some of the leading Gold Mutual funds and Gold Exchange traded funds are
Gold Exchange traded funds
- SPDR Gold Trust
- iShares COMEX Gold Trust
- Market Vectors TR Gold Miners
Gold Mutual Funds
- Vanguard Precious Metals and Mining
- US Global Investors World Prec Minerals
- U.S. Gbl Inv Gold and Precious Metals
- USAA Precious Metals and Minerals
- Tocqueville Gold
- Rydex Precious Metals Inv
Disclaimer:
“Mutual Funds and securities investments are subject to market risks and there is no assurance or guarantee that the objectives of the Scheme will be achieved. Please read the Statement of Additional Information and Scheme Information Document carefully before investing”.
“In Mutual Funds, the past performance is not guaranteed in future”.
The information contained in this website has been obtained from sources considered to be authentic and reliable. However, InvestMutualfunds.net is not responsible for any error or inaccuracy or for any losses suffered on account of information.
