Gold Exchange Traded Fund.
A type of mutual fund which in turn invests in gold and the units of this mutual fund scheme is listed in the stock exchange. One only needs Demat account and trading account, a small percentage as brokerage fee and fund management charges.
Gold Fund of Funds.
Gold fund is a Fund of Fund which will invest in Gold ETFs on behalf of you, here you do not require holding any Demat a/c. As this is like any other mutual fund scheme the SIP investment in gold is possible through these gold funds. Still buying Gold fund of
However, Gold fund of fund is the expensive option, as one has to pay annual management charges for the underlying Gold ETF and the Annual management charges of Gold FOF Scheme.
Equity-based Gold Funds.
Equity-based gold funds are directly not investing in Gold but investing in the companies, which are related to the mining, extracting and marketing of the Gold. Its performance is purely dependent upon the performance of the fund house and the equities they are investing.
However, as these are equity-based funds, equity risk is there. As there are no listed companies in India associated with Gold, these funds trade in the international market and quite susceptible to currency risk apart from gold-risk and equity-based risk.
Comparing each gold investment option, one can conclude that Gold ETFs and Gold Funds are safest, profitable and most preferred options among the alternative of Equity-based Gold Funds.