5 things you should know about investing in gold mutual funds

Many investment experts were asking investors to invest in gold during Diwali. Did you hear anything? You might be wondering why these investors are still bullish on the yellow metal that has given very high returns since the pandemic tightened it...

Many investment experts were asking investors to invest in gold during Diwali. Did you hear anything? You might be wondering why these investors are still bullish on the yellow metal that has given very high returns since the pandemic tightened its grip across the globe.

You are right. Gold has given very high returns in the last one year. The gold mutual fund category has given around 30% returns in the last one year. Two months ago, some funds were giving round 50% returns. So, you are right about the yellow metal shining bright ever since Covid-19 has started spreading across the globe, raving global economy and causing disruptions along its path. The precious metal, always considered a hedge in times of uncertainty, gains a lot as investors to sought safety.

However, it has been losing its steam ever since good news from pharma companies regarding vaccines started rolling in. Now that the roll out of vaccine looks certain, there are many bullion experts who believe that the yellow metal is unlikely to shine bright in the coming months. They point out that gold was stuck in a narrow range for a very long time after the global meltdown in 2008.


Don't stop reading yet. However, many investment managers believe that it is premature to write off gold in a hurry. They point out that many uncertainties regarding global growth may persist even after the roll out of vaccines. Even the efficacy of the vaccine may be questioned. So, gold may continue to do well for some more time.

So, where does that leave you, an average mutual fund investor? One, you should never invest in gold to pocket very high returns. Always remember that diversification or reducing the overall risk on the portfolio should be the reason why you should invest in gold. Gold may offer you higher returns during such uncertain periods, but it will offer only modest returns over a long period.

If you are still planning to invest in gold, you may choose a consistent gold fund and start an SIP. Keep it as a part of your overall investment plan. It should never be more than 5-10% of your total portfolio. Take your eyes off the returns and focus more on the stability it offers to your portfolio.
ADVERTISEMENT
Download
The Economic Times Business News App
for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App
for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
READ MORE
ADVERTISEMENT

Top Mutual Funds

3 M(%)
6 M(%)
1 YR(%)
3 YRS(%)

READ MORE:

LOGIN & CLAIM

50 TIMESPOINTS

Save with Tax planning SIP's

More from our Partners

Loading next story
Text Size:AAA
Success
This article has been saved

*

+