Gold Fund

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DEFINITION of 'Gold Fund'

A mutual fund or exchange-traded fund (ETF) that invests primarily in gold-producing companies or gold bullion. The price of shares within a gold fund should correlate very closely to the spot price of gold itself, assuming the fund holds the majority of its assets in bullion or in the stocks and bonds of gold miners and manufacturers.


BREAKING DOWN 'Gold Fund'

While many mutual funds focus on manufacturing and production stocks within precious metals, a few new ETF entries have focused primarily on ownership of gold bullion. Gold funds are a valuable tool for investors, including speculators (gold can be a very volatile commodity) and those wishing to hedge against geopolitical instability. Gold is also valuable as a bet against a falling currency. By investing in a gold fund, a retail or institutional investor can gain exposure to this asset without the hassle of taking delivery of physical gold assets, which is often required in the commodities market.

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RELATED FAQS
  1. How do dividends affect net asset value (NAV) in mutual funds?

    Distribution of dividends reduces the net asset value (NAV) of mutual fund shares. However, this doesn't mean that fund investors ... Read Full Answer >>
  2. Are mutual funds considered retirement accounts?

    Unlike a 401(k) or Individual Retirement Account (IRA), mutual funds are not classified as retirement accounts. Employers ... Read Full Answer >>
  3. Do mutual funds invest only in stocks?

    Mutual funds invest in stocks, but certain types also invest in government and corporate bonds. Stocks are subject to the ... Read Full Answer >>
  4. Why are mutual funds not FDIC-insured?

    Mutual funds are not Federal Deposit Insurance Corporation (FDIC)-insured because money invested in funds are not considered ... Read Full Answer >>
  5. Can mutual funds invest in commodities?

    Mutual funds can invest in commodities. In fact, mutual funds may provide a better way for investors to gain exposure to ... Read Full Answer >>
  6. Can mutual funds invest in IPOs?

    Mutual funds can invest in initial public offerings (IPOS). However, most mutual funds have bylaws that prevent them from ... Read Full Answer >>

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