Gold ETFs are exchange-traded funds that invest in physical gold. Each unit of a Gold ETF represents 1 unit (or in some cases 0.5 units) of gold. While the meaning of Gold Mutual Fund is that fund of funds scheme that invests in Gold ETF. Both help investors do away with making charges associated with physical gold. Gold ETFs are traded on the exchange at the prevailing market price of physical gold, which implies that investors can buy or sell their holdings at prices that are close to the market price, without worrying about paying a significant premium on purchase or selling at a discount.

When it comes to purity, both invest in Gold. (in case of Gold Mutual Fund, the underlying asset which is the Gold ETF invests in gold).

Gold Mutual Fund in India enables you to make a systematic purchase, which means you can invest a fixed amount of money at regular intervals which may help to reduce the average cost of your investment over the long term. Systematic purchases can be made by buying on the exchange or through Gold Funds that invest in the Gold ETF. Through Gold Funds, you can sign up for buying gold at regular intervals for the desired period in a single transaction.

Both can help you diversify your portfolio when it comes to investing. You can easily expose your money to the prevailing prices of gold. Both allow you to invest in Gold in a matter of few clicks from the comfort of your home.

Both can be easily liquidated at a value close to the prevailing price of gold and can be purchased from the comfort and safety of your home.

When you compare Gold ETF vs Gold Mutual Fund, last but not the least, you will need a DEMAT account to invest in Gold ETF while investing in Gold Mutual Fund will not require a DEMAT account.

Gold is thus, a safe haven asset, which makes it an effective portfolio diversifier. It’s thus prudent to allocate 10-15 percent of your portfolio investments to gold. Please consult your financial advisor before taking any asset allocation related decisions.