Kotak Gold Mutual Fund is not a Gold ETF, but in fact it is a Gold Fund of Fund, and its whole sole objective is to to generate returns by investing in units of Kotak Gold ETF. Kotak Gold Fund is a feeder fund which invest its corpous into Kotal Gold ETF.
Thus being passively managed, KGF enables its investors to invest in gold through a paper form, thereby providing the convenience of Systematic Investment Plan (SIP) as well as lump sum investments, but without having its investors to open a demat account to avail its benefits (which is unlike Gold ETFs). Since SIP is a special feature of KGF, it provides the convenience and advantage of rupee-cost averaging and compounding to its investors. Also since holding a demat account is not necessary, investors would not have to incur charges such as annual maintenance charge for demat account, delivery brokerage charges, transaction charges (while investing in demat mode) etc; thus making it a cost effective investment proposition.
Moreover liquidity too is not restrained by the fund, as investors can subscribe and redeem units on all business days directly from the AMC (while purchase and sale of gold ETFs depends upon the liquidity on the exchange).
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