Gold funds have become a significant part of investors’ portfolios, with experts recommending allocating a portion to gold for diversification. Laith Khalaf of AJ Bell suggests an allocation between 5% and 10% of a portfolio to gold. This allocation serves as a means of diversifying equity holdings alongside bonds and cash.
While some may consider investing in physical gold, there are alternative ways to gain exposure to gold price movements. Gold funds offer an avenue to track these price changes without the need to store physical gold. Over the past year, gold has seen a significant increase in value, with rising flows into gold funds driving much of this price action.
One popular option for exposure to gold is through physical gold Exchange-Traded Commodities (ETCs). These ETCs back the spot price of gold by holding physical gold, offering investors a way to benefit from gold price movements. It’s crucial to ensure that the gold ETC complies with industry standards to mitigate social and environmental impacts associated with gold mining.
For investors seeking accessibility to physical gold, The Royal Mint Responsibly Sourced Physical Gold ETC provides an option to redeem shares for physical gold stored in a secure vault. Apart from physical gold ETCs, investors can also consider gold mining funds, which offer exposure to gold mining stocks rather than physical gold.
Gold mining funds track gold spot prices but are influenced by various factors beyond gold prices, such as individual mine viability and management strategies. Some noteworthy gold mining funds include the VanEck Gold Miners UCITS ETF, AuAg ESG Gold Mining UCITS ETF, L&G Gold Mining UCITS ETF, and WS Ruffer Gold Fund, each offering unique features and performance.
Investors looking for broader exposure can explore funds that combine gold exposure with other metals, such as the Jupiter Gold & Silver Fund or investment trusts like Golden Prospect Precious Metals. These funds provide exposure to gold and other metals, offering diversified investment opportunities within the precious metals sector.
Overall, gold funds present a range of options for investors seeking exposure to gold, whether through physical gold ETCs, gold mining funds, or funds with broader metal exposure. By diversifying portfolios with gold investments, investors can potentially benefit from the unique properties and performance of the precious metal.
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