Commodities: Gold

What is it?

Commodity mutual funds invest in various commodities like precious metals, grains, etc. So, gold commodity funds invest in gold.

Objective

The objective of these funds is to generate decent returns by investing in gold.

Suitability and opinion

These funds are suitable for investors with a moderate risk appetite. These funds can be a good option for investors bullish on gold or for investors looking to diversify their portfolios by investing in commodities. We are not very bullish on gold and other commodities as the preferred asset for long-term investments. But if investors still want to invest in gold, then we feel that Sovereign Gold Bond (SGB) scheme by the government is a better option. It is suitable for long-term investors as you can not redeem your investment for 5 years. It also provides additional 2.5% guaranteed returns over and above the returns of gold funds.