What Does the Top Mutual Fund Distributor in Pune Have to Say About Gold Mutual Funds and ETFs?

For generations, gold has been more than just a metal, it’s been a symbol of security and pride.

But in today’s world, we have gold mutual funds and gold ETFs as gold investments.

Everyone is looking for the best mutual funds in Pune. One category that’s gaining attention is gold-based funds, and 2025 has proved to be a Golden Year for Gold.

Let’s break it down simply and understand what this cost is all about, and how it could impact your returns.

The Changing Face of Gold Investments

A few years ago, buying gold meant heading to the jeweller or buying coins and bars. But now, digital gold investments have made life much easier. You can invest in gold without worrying about purity, safety, or storage.

That’s where gold ETFs and gold mutual funds come in. Both help you invest in gold, but they work differently and cost you differently. If you’re just starting your investment journey then talking to a mutual fund advisor in Pune, such as Golden Mean Finserv can be very beneficial for you. This is something you’ll want to understand before making a decision.

●     What Are Gold ETFs?

Gold Exchange Traded Funds (ETFs) are a type of passive investment. They directly track the price of physical gold and are traded on the stock exchange, just like shares. Each unit of a gold ETF represents a certain amount of gold, usually one gram.

The biggest advantage? Gold ETFs usually have a low expense ratio, meaning they cost less to manage. But you’ll need a demat account to buy and sell them. That’s why some investors who don’t have a demat account prefer gold mutual funds instead.

●     What Are Gold Mutual Funds?

Gold mutual funds are slightly different. Instead of directly investing in physical gold, these funds invest your money into gold ETFs, which then invest in gold.

In simple words, you’re one step further away from the gold itself. The mutual fund invests in the ETF, and the ETF holds the gold. It sounds fine until you notice what this means for your wallet, a double layer of cost.

The Hidden “Dual Expense Ratio”

Here’s the part most investors miss. When you invest in a gold mutual fund, you pay the expense ratio of the mutual fund itself. But because the mutual fund invests in a gold ETF, you’re also indirectly paying for the ETF’s expense ratio.

That means - two layers of fees.

For example, if your gold mutual fund shows an expense ratio of 0.5%, that’s just for the mutual fund scheme. The ETF it invests in may charge another 0.7% - so your total effective cost becomes 1.2%.

It might not sound like much, but over time, this can eat into your returns, especially if you’re investing for the long term.

Why Do Mutual Funds Show Lower Expense Ratios?

At first glance, you might notice that gold mutual funds often appear cheaper than ETFs. That’s because the fund’s own expense ratio looks lower. But the catch is, the ETF cost is not always included in the main expense ratio you see on investment platforms.

The full cost only becomes clear when you read the fund’s factsheet or offer document carefully. This is where a top mutual fund distributor in Pune can make a real difference - they can help you interpret these documents and understand what you’re actually paying for.

How This Impacts Your Returns

When you pay dual expenses, your overall returns can reduce over time. It’s like buying a product that looks cheaper at first but has hidden delivery and maintenance costs later.

So, if you had invested ₹1 lakh in a gold mutual fund, your effective annual cost might be higher than you initially thought. Over five or ten years, this difference compounds, and the final amount you receive could be significantly lower than if you had invested directly in a gold ETF.

Gold ETFs vs Gold Mutual Funds: A Quick Comparison

Feature                                                    Gold ETFs                     Gold Mutual Funds

Investment Type                          Directly in physical gold                      Invests in gold ETFs

Demat Account Required?                     Yes                                                      No

Expense Ratio                                         Lower                                     Higher (dual cost)

Liquidity                                  High (traded on exchange)                         Moderate

Ease of Investing               Suitable for experienced investors        Suitable for beginners

If you already have a demat account and understand how the stock market works, investing in gold ETFs might make more sense. But if you prefer simplicity and want to invest through SIPs, gold mutual funds can still be a convenient option - just be aware of the costs.

Conclusion:

Gold will always hold emotional and financial value. But smart investing is about looking beyond tradition, and understanding how your money actually grows.

If you want to add gold to your portfolio, take a little time to understand where your money flows and what costs are involved. Whether you invest through a gold ETF or a gold mutual fund, the key is to make an informed choice - not just a convenient one.

After all, every percentage you save in costs today can become a bigger gain tomorrow.