You don't invest directly in gold when you invest in gold funds. The most common means of buying gold directly is in gold bars. The most common way to invest in gold as an investment security is through an exchange-traded fund (ETF), such as SPDR Gold Shares (GLD). Gold ETFs are exchange-traded funds that offer investors exposure to gold without having to directly buy, store and resell the precious metal.
Some gold ETFs directly track the price of gold, while others invest in companies in the gold mining industry. While you may be able to find plenty of gold mutual funds, most of these funds also invest in other precious metal assets such as platinum, palladium, and silver. The most obvious metrics to consider when reviewing a gold investment fund for investment purposes include the overall and annual performance of a fund. This list includes the most ubiquitous gold ETFs in the market (funds that you can normally read about in almost any daily commodity summary), as well as some that are not as well covered by financial means, but that could be better investments than their high-asset siblings.
Investors tend to turn to precious metals when there is an investment crisis because gold often retains its value during those times. For investors who don't have the time to research the markets thoroughly to choose good investment assets, mutual funds offer a relatively safe, convenient and viable investment solution. This fund invests in small-cap foreign mining companies that generate at least half of their income from gold and silver. Mutual funds also offer investors the ability to choose from a variety of asset classes and investment types ranging from commodities such as gold to various stock sectors and emerging market stocks.
These funds offer the combined benefits of investing in physical gold and professional fund management. Gold funds are an ideal investment option for investors looking to protect their capital against inflation. Its investments also include foreign and domestic shares of companies of any size that provide goods and services in all sectors related to gold mining and precious metal industries. These funds are a more comfortable option for investing in gold than maintaining it as a physical asset.
Through a wholly owned subsidiary, the fund also invests up to 25% of its assets directly in gold and other precious metals. The average long-term return on gold as an investment tends to be around 3%, which is much lower than that of most S%26P 500 equity funds.