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Top Gold ETF vs Top Large Cap Mutual Fund 10-year Return Calculator: As an investor, our target is to get the maximum output from our investments and to create a corpus that can meet most of our needs or guide us to achieve financial freedom.
But however smart returns an investment tool is providing, we can’t rely heavily on that, specially when it is market-linked.
Any asset class that is rising fast today can fall with a chance in local or global economic conditions, a change in government policies, or a change in rules.
In diversification, investors need to invest in mutual funds that can provide stability in the long run. Large cap mutual funds and gold ETFs can be two such options.
While large cap mutual funds provide stability due to their high exposure to large cap stocks, gold exchange-traded funds (ETFs) can be a stable investment option due to their exposure to gold-related investment.
In this write-up, know the basic difference between two; which has been the best ETF and the best large cap mutual fund in terms of highest annualised return (CAGR) in the 10-year period; how a Rs 10 lakh investment has grown in either of the options.
Gold ETF
Gold ETFs are traded like tocks in the share market.
Investors who don’t want to invest in physical gold directly but want to take advantage of its price appreciation invest in gold ETFs.
These ETFs track the price of physical gold of 99.5 per cent purity.
One needs to have a demat account to trade gold ETFs.
Like physical gold, gold ETFs are also suitable for investors with a long-term investment horizon.
Gold ETFs are passive mutual funds and have a low expense ratio.
Large cap mutual funds
Though Association of Mutual Funds in India (AMFI) categorises all equity mutual funds as high-risk funds, large cap mutual funds provide stability in the long term due to their heavy exposure to large cap stocks.
Securities of Exchange Board in India (Sebi) says that large cap mutual funds need to have at least 80 per cent of their investments in large cap stocks.
Large cap firms in India are the top 100 firms with the highest market capitalisation.
They are fundamentally strong and have diversified businesses across the globe.
Exposure to such companies gives some stability to large cap mutual funds.
Top gold ETF in 10 years
LIC MF Gold ETF has given the highest annualised return at 10.97 per cent in the 10-year period.
It has assets under management (AUM) of Rs 172 crore, while its net asset value (NAV) is Rs 6,996.3883.
Benchmarked against the domestic price of gold, the ETF has given 6.86 per cent annualised return since its inception in November 2011.
At an expense ratio of 0.41 per cent, the ETF has the minimum investment of Rs 10,000.
Top large cap mutual fund in 10 years
Quant Focused Fund – Direct Plan is the top large cap fund with 17.64 per cent annualised return in the 10-year time frame.
It has AUM of Rs 1,121 crore, while its net asset value (NAV) is Rs 96.1379.
Benchmarked against NIFTY 500 TRI, the fund has given 18.70 per cent return since its inception in January 2013.
With an expense ratio of 0.66 per cent, the fund has Rs 1,000 as the minimum SIP investment and Rs 5,000 as the minimum lump sum investment.
Current value of Rs 10 investment in LIC MF Gold ETF in 10 years
A Rs 10 lakh investment in the top gold ETF has ballooned to a total of Rs 28,31,756 in 10 years.
Current value of Rs 10 investment in Quant Focused Fund – Direct Plan in 10 years
A Rs 10 lakh investment in the top large cap mutual fund has turned into Rs 55,52,738 in the 10-year time frame.