How To Buy Gold And Silver Through Mutual Funds

• Investors can simultaneously invest in gold and silver through mutual funds without directly holding these metals

• Here are ways how to invest in the precious metals

Mutual funds (MFs) offer an easy way to invest in both gold and silver simultaneously and gain from market movements without physical ownership of them. Many exchange-traded funds (ETFs) or fund of funds (FOFs) track bullion; similarly, many multi-asset allocation funds also offer a hybrid portfolio with precious metals also being a part of it.

How To Invest

Investors have the option to add silver and gold to their portfolios through ETFs or FoFs, which are offered by many asset managers. Once investors opt for these funds, they receive certain units based on the net asset value (NAV) of the scheme. These schemes invest in physical gold or silver, through which the NAV of the fund also moves in accordance with the value of these metals. This gives investors indirect exposure to owning these metals without much direct interference.

Additionally, there are also funds with multi-asset allocations which invest in gold and silver, typically around 10-25 per cent. These funds provide investors with indirect exposure to capitalise on the gains in the metal markets. These funds also invest in other assets like equities and debt, and usually allow funds to rebalance automatically, and offer a diversified product.

Investing In gold And Silver Through SIPs

Many of these MFs offer a systematic investment option along with a regular plan. These funds also offer options of systematic transfer plans (STPs). There is usually no upper cap on investing in these metals through mutual funds.

MF investments are taxed through capital gains taxes. For units held more than 12 months, long-term capital gains tax will be applied at the rate of 12.5 per cent. If the units of these MFs are sold within a year, then short-term capital gains tax, based on the investor’s income slab. In case of FoFs, the threshold to hold units to be considered according to the income slab of investors is 24 months, beyond which a 12.5 per cent rate will be applied on holdings. Investors should consider their investment limits and exposure requirements before opting for such funds.