Fidelity Select Gold Portfolio Fund
The Fidelity Select Gold Portfolio Fund was established in 1985 by Fidelity Investments. This precious metals fundâs main focus is to provide investors with capital appreciation.
Under normal circumstances, fund manager Steven Calhoun invests a minimum of 80% of the fundâs total assets in the common stocks of corporations that participate in various forms of gold-related operations, and in gold bullion and coins.
Investments are also made in additional precious metals, instruments with a value that is connected to the price of precious metals, and the securities of businesses that distribute products, such as jewelry, that contain precious metals and minerals. The fund is invested in both U.S. domestic and foreign-issued stocks.
The Fidelity Select Gold Portfolio Fund has a net expense ratio of 0.76%. The five-year average total return for the fund is 6.73% as of Feb. 28, 2022. Total portfolio assets for the fund are $1.3 billion.
Some of the fund’s major holdings include Newmont, Barrick, Franco-Nevada, and Agnico Eagle Mines.
The Popularity Of Gold Mutual Funds Can Be Attributed To The Following Factors:
- Minimum investment amount
- No Demat account required
Investors do not face liquidity risks with gold mutual funds as the investment can be easily traded from the fund house. Investors using this investment option do not face the risks associated with physical Gold as the gold funds do not directly invest in physical Gold but indirectly through gold ETFs.
Top Available Gold Funds For Investment
As mentioned, most mutual funds that deal with gold and precious metals focus on mining stocks, but some allocate a certain amount to gold bullion. These funds span the globe, but most major firms have headquarters in the United States, Australia, and South Africa. Here are some of the best gold funds available for investment.
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Let Us Take A Closer Look At Each Of These Top 5 Gold Mutual Funds For 2021
1. Nippon India Gold Savings Fund:
This is one of the best gold mutual funds in India. It has generated a return of 14.58% in the last three years. The fund has a decent AUM of Rs 1,429 crores. This is 126% higher than category average.
The fund invests 99.98% of the corpus in Nippon India ETF Gold BeEs. The remaining is invested in cash and cash equivalents. The fund has a relatively low lock-in period of 15 days only. Investing in Nippon India Gold Savings Fund is highly affordable as you can start SIP with just Rs 100 per month.
The funds expense ratio of 0.32% is 41% lower than category average. The fund has a high turnover rate of 93% and carries moderate-high risk.
It is truly the best gold mutual fund as it has beaten its peers by a huge margin in the long-term.
Source: www.rankMF.com *Data as on 7th July 2021.
2. Quantum Gold Savings Fund:
This fund is not very popular among investors as its AUM is only Rs 68 crores. But still it is one of the best gold mutual funds in India. Its expense ratio is only 0.21% which is 32% lower than category average.
The best part is that the fund has no exit loads. The funds turnover ratio is only 12.52%, which means the fund manager is not churning the portfolio much.
Source: www.rankMF.com *Data as on 7th July 2021.
3. Invesco India Gold Fund:
This is a fairly new fund but nevertheless it has generated superior returns. It has an AUM of Rs 50 crores. The fund has a high expense ratio of 0.45%.
4. Aditya Birla Sun Life Gold Fund:
Why Should You Invest In Gold Funds
Gold funds are often picked by investors instead of physical gold because of two reasons. Firstly, it is easier to invest in a gold fund. You can do it with your money and keep it digital instead of holding the gold in a physical form. The storage of this precious thing in the digital form helps to reduce the risk that it will be lost because someone might steal it.
Another reason is that mutual funds are an easy and popular choice for gold investment, especially with the added perk of professional fund management. Investors in gold funds enjoy the benefits of professional fund managers who are experts at handling all aspects and gain sympathy from their years of experience. The holders are given access to the underlying asset for physical gold, which is directly affected by its price.
Whereas investors in physical gold have no such expertise and often rely on their research to buy and sell calls during hazardous market conditions.
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What Is The Purpose Of Gold Funds
The primary purpose of these types of investments is to create wealth during the investment tenor and create a cushion against market collapse. Because of golds varying prices, the performance of its underlying stocks often differ greatly for example, even a tiny change in golds global market price can cause substantial alterations in its stocks return. The return of the best gold funds can even outgrow the actual price of the precious metal itself, which can create a lucrative opportunity for investors.
If an investor opts for long-term gold mutual funds, the returns received will be calculated based on the current markets gold prices. It can provide a significant return if the price of gold increases at the time of redemption.
Month End Average Annual Total Returns As Of 09/30/2022
| Fund | ||
|---|---|---|
| Gold and Precious Metals Fund | 7/1/1974 | |
| World Precious Minerals Fund | 11/27/1985 | |
| USGI Global Luxury Goods Fund | 10/17/1994 | |
| U.S. Government Securities Ultra-Short Bond Fund | 11/1/1990 | |
| Near-Term Tax Free Fund | 12/4/1990 | 0.46% |
Expense ratios as stated in the most recent prospectus.
The Adviser of the Gold & Precious Metals Fund has voluntarily limited total fund operating expenses to not exceed 1.90%. With the voluntary expense waiver amount of , Total annual expenses after reimbursement were 1.59%.
The Adviser of the Global Luxury Goods has contractually limited, through April 30, 2023 total fund operating expenses to not exceed 1.80%. Total annual expenses after reimbursement were 1.80%.
The Adviser of the Emerging Europe Fund has voluntarily limited total fund operating expenses ) to not exceed 2.85%. With the voluntary expense waiver amount of , total annual expenses after reimbursement were 2.67%.
The Adviser of the World Precious Minerals Fund has voluntarily limited total fund operating expenses to not exceed 1.90%. Total annual expenses after reimbursement were 1.75%.
The Adviser of the China Region Fund has voluntarily limited total fund operating expenses ) to not exceed 2.55%. With the voluntary expense waiver amount of , total annual expenses after reimbursement were 2.55%.
U.S. Global Investors, Inc. can modify or terminate the voluntary limits at any time, which may lower a funds yield or return.
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Who Should Invest In A Gold Etf
Gold ETFs are ideal for investors who wish to diversify their investment portfolio through another asset class. Also, they suit investors who want exposure to gold and want to participate in the market. Since Gold ETFs are backed by the gold of 99.5% purity, they are low-risk investments. Hence, they are suitable for investors with low-risk tolerance levels.
Gold ETFs are in a dematerialised form which reduces the risk and costs of storing gold. Moreover, these funds are more tax-efficient than physical gold. Hence investors who want to invest in gold to earn a return or convert them into physical gold in future can consider investing in Gold ETFs. Furthermore, Gold ETFs track the prices of gold in real-time. Hence investors who want to track their gold investments on a real-time basis can consider investing in Gold ETFs.
Annualized Quarterly Returns As Of 09/30/2022
| Fund | ||
|---|---|---|
| Gold and Precious Metals Fund | 7/1/1974 | |
| World Precious Minerals Fund | 11/27/1985 | |
| U.S. Global Luxury Goods Fund | 10/17/1994 | |
| U.S. Government Securities Ultra-Short Bond Fund | 12/4/1990 | |
| Near-Term Tax Free Fund | 11/1/1990 | 1.06% |
Expense ratios as stated in the most recent prospectus.
The Adviser of the Gold & Precious Metals Fund has voluntarily limited total fund operating expenses to not exceed 1.90%. With the voluntary expense waiver amount of , Total annual expenses after reimbursement were 1.59%.
The Adviser of the Global Luxury Goods has contractually limited, through April 30, 2023 total fund operating expenses to not exceed 1.80%. Total annual expenses after reimbursement were 1.80%.
The Adviser of the Emerging Europe Fund has voluntarily limited total fund operating expenses ) to not exceed 2.85%. With the voluntary expense waiver amount of , total annual expenses after reimbursement were 2.67%.
The Adviser of the World Precious Minerals Fund has voluntarily limited total fund operating expenses to not exceed 1.90%. Total annual expenses after reimbursement were 1.75%.
The Adviser of the China Region Fund has voluntarily limited total fund operating expenses ) to not exceed 2.55%. With the voluntary expense waiver amount of , total annual expenses after reimbursement were 2.55%.
U.S. Global Investors, Inc. can modify or terminate the voluntary limits at any time, which may lower a funds yield or return.
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Why Not Invest Directly In Gold Mining Stocks
As clearly mentioned above, most gold funds put their investors money into stocks of gold mining firms so that theres enough growth potential or theres meaningful growth. The capital appreciation derived from owning physical gold is low compared to equivalent stock market investments.
Then, why not invest in gold stocks directly? Why take the mutual fund route? The answer to the question is two-fold: expert supervision and risk balance.
Putting money in the stock market is easy, but doing it the right way is not that simple. Theres a relatively steep learning curve. You would have to crunch numbers, know the past performance of stocks youre considering, pore over the companys financial statements and other related documents carefully, etc.
Even seasoned investors cannot confidently say their equity investments will fetch them good returns. There are just too many cogs in the securities investment wheel. And you, the investor, do not have control over most of them or cannot directly influence them.
The gold mining stock that a gold fund holds money in, albeit a significant portion, is not the only asset class where the money goes. The money is held in various other forms of gold investments, such as physical gold and gold ETFs. Moreover, stocks of several gold mining firms are invested in.
What You Should Consider As An Investor
Unlike other equities, gold doesnt offer high returns bar some exceptions. Most investors flock to it by the necessity of having a haven during a market crisis as its an excellent inflation hedge. Others have concerns about expansionary monetary policies, chronic trade deficits, high levels of government borrowing, and other factors that could cause the value of the U.S. dollar to decline.
Overall, gold isnt a bad asset class, but it isnt the best long-term option to generate wealth long-term. Try to avoid using it as a timing tool or as your sole investment vehicle. Most asset allocation and portfolio diversification strategies recommend investing a bit into it during depressions and switching to other assets once the market recovers.
Additionally, as these have fund managers, you have a small role to play. You can limit yourself to calculating your budget and selecting your ideal option.
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Gold Funds Vs Gold Etfs: Which Is Better
Gold mutual funds are among the newest ways to invest in Gold as an asset. They are gold funds that invest in Gold ETFs . A gold mutual fund is a variant of Gold ETFs as they are open funds traded with a gold ETF. Gold mutual funds do not directly invest in physical Gold but somewhat indirectly by investing in Gold ETFs.
What Is Gold Mutual Fund
A gold mutual fund invests the collected corpus in gold exchange traded funds . Its aim is to copy the movement of domestic gold prices. It is an actively managed fund of funds .
Gold mutual fund provides the dual benefit of professional portfolio management and holding physical gold. One unit of gold mutual fund is equal to one gram of physical gold.
Gold mutual funds are highly popular during political instability or when the stock markets are falling. Since they invest in gold ETFs, gold mutual funds are highly liquid.
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Gold Bullion Strategy Investor
Gold Bullion Strategy Investor invests all of its assets in gold bullion-related investments. With a focus on reflecting the physical gold bullion market in its value, the funds investments include over-the-counter, gold-forward contracts, gold ETFs and gold exchange-traded notes . The remainder of the fund’s assets is used to offset the funds expense ratio by investing in fixed-income securities.
QGLDX is designed as a buy-and-hold mutual fund. Through the employment of proprietary computer models, the funds managers invest in a variety of gold futures contracts every day to ensure that the price of gold is tracked as accurately as possible. Because of its unique trading parameters, QGLDX offers direct exposure to tracking gold bullions daily price within a mutual fund structure. The companys top 10 holdings, which make up 47.91% of the fund, include:
For an updated list of QGLDXs holdings, click here.
Should You Invest In Gold
If youâre concerned about inflation and other calamities, gold may offer you an investing safe haven. Though in the shorter term it can be just as volatile as stocks, over the very long term, gold has held its value remarkably well.
Depending on your own preference and aptitude for risk, you may choose to invest in physical gold, gold stocks, gold ETFs and mutual funds or speculative futures and options contracts. Regardless of the form of gold you choose, most advisors recommend you allocate no more than 10% of your portfolio to it.
Any form of investing carries risks. Gold is no different. But the idiosyncratic gold market isnât forgiving and takes a long time to learn. This makes gold ETFs and mutual funds the safest choice for most investors looking to add some of goldâs stability and sparkle to their portfolios.
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The Advantages Of Investing In Gold
The basic advantages of investing in gold derive from it being a fixed asset. There’s a strong global demand for gold. As such, its price moves up and down in the short term, but it often rises in value over the long term, although without similarity to stock prices. It is often thought to be a steady-value investment.
Gold is a very liquid asset. You can readily convert it to cash or to other investments if needed. Investors tend to run to precious metals when there’s an investing crisis because gold often retains its value during those times. Gold has become a diversification strategy for many investors for that reason.
What Elements Affect Your Returns In Gold Mutual Funds
Some elements can significantly affect your returns in gold mutual funds. The following are some of the most important ones.
Value of Gold
Gold is traded every day on various commodities exchanges. Since trading depends on supply and demand, it leads to price deviations. The value of gold may increase or decrease at any given moment, and this impacts the funds. Due to these fluctuations, gold funds are exposed to risk and unpredictable changes.
Currency Exchange
Mutual gold funds undergo fluctuations in the currency exchange rate . When you invest in foreign currency, any fluctuation in the exchange rate could impact your return.
Asset Class
The asset class risk mainly impacts gold funds that invest in gold mining shares or distribution companies. If there are any changes in regulations, laws, or political factors, they could impact the gold industry, i.e., your fund, regardless of the company or mining share in which youve invested. Investors call it the industry-specific risk and is something you cant ignore, especially when increasing your funds investments.
Individual Stock
If a gold mining company undergoes certain changes for example, management decisions, lawsuits, or financial loss it creates red flags you shouldnt ignore. These changes may have a significant impact on the companys stock value and mutual fund performance.
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Gold Mutual Funds Vs Sovereign Gold Bonds
Sovereign gold bonds are issued by the Reserve Bank of India on behalf of the government of India. The aim is to encourage investors to shift from physical gold to digital gold.
SGBs are government bonds but the units are allocated in grams of gold. They track the exact movement of gold without you holding the physical gold. These gold bonds are redeemed in cash on maturityjust like gold mutual funds.
SGBs are an excellent way of investing in gold without incurring storage or insurance charges. The best thing is that they carry the sovereign guarantee.
This means your investment is 100% safe from default risk. Additionally, SGBs also offer 2.5% guaranteed annual interest to investors.
But these bonds do not have easy liquidity like gold mutual funds. SGBs have a lock-in period of eight years. So, your money is locked in for eight years! This can be an issue for investors with short term or medium-term goals.
Hence, while both gold mutual funds and SGBs track the same asset, gold mutual funds are highly liquid and hence a better option.
