Gold mutual funds are gaining attention as a safe-haven investment to hedge against the market volatility 2014 has brought so far.
These types of investments are managed by professionals who analyze and monitor the movement of gold and invest accordingly in bullion and equities. Through a gold mutual fund, investors can target companies involved with the mining, exploration, distribution, and/or processing of the yellow metal.
Here we examine one method for how to invest in gold, using gold mutual funds – plus we've highlighted a few to get you started today.
Deciding Whether Gold Mutual Funds Are the Right Investment Tool for You
There are four notable advantages to investing in gold mutual funds.
One is that, in purchasing shares of a gold mutual fund, an investor is automatically gaining portfolio diversity, when compared to purchasing shares in a single company.
Another advantage is ease of use. Because of fund managers' oversight – which is the case for all gold mutual funds – an investor will not have to constantly track this investment. Instead, all the investor need do is select and invest in a mutual fund of choice. The rest of the research and monitoring is done by the fund managers. A single call will provide detailed information on the status of your funds, and assistance will be provided by your fund managers in buying or selling your fund units.
Yet another plus is that gold mutual funds allow investors to get involved with the yellow metal without the risks and challenges of storing tangible gold coins or bullion.
And finally, as opposed to investment tools like exchange-traded funds (ETFs), for which each transaction costs a brokerage fee, there is no such fee charged for gold mutual funds.
However, this advantage brings up the one factor of gold mutual funds that turns off investors looking for a short-term profit…