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Now is the time to invest in gold and a safe way to own gold stocks is to invest in gold mutual funds. The fund has holdings in a variety of stocks related to the gold sector and the investment decisions are left to a professional fund manager. This makes gold mutual funds attractive to conservative investors who want some gold in their portfolios but do not want to spend a lot of time managing the investment.

Gold mutual funds have more volatility than physical gold, so that makes them more risky than holding the precious metal in its pure form. However, few people can afford to purchase a gold bar, so this is the next best thing. There are gold mutual funds that focus on certain aspects of the industry, such as mining, so it should not be difficult to find a find that meets the investment interests and goals.

Some funds, like U.S Global Resources Fund, include a variety of commodities outside of precious metals, such as oil and gas. These provide the investor with exposure to other industries, spreading the risk. Top gold mutual fund performers over the past year include Tocqueville Gold, Dynamic Gold and Precious Metals I, and the Oppenheimer Gold & Special Minerals A, N, C, and B funds. Each earned an annual return of over 41 percent as of July 31, 2010.

From a more long-term investment perspective, Van Eck International Investors Gold I and USAA Precious Metals and Minerals earned returns of 20.97 and 17.37 percent, respectively, over the past three years. Van Eck and USAA also top the five year gold mutual fund performers list with 31.86 and 28.18 percent respective returns. Van Eck’s International Investors Gold Y, A, and C funds had impressive returns of 26 percent or higher during this period.

As is clear from the information above, not all gold mutual funds are pure plays on gold, meaning not all are devoted entirely to the gold sector. The volatility of gold mutual funds varies, as do the fund transaction and expense fees. Though these funds are highly liquid, some may charge a fee if the investor sells before a stipulated holding period, which is usually six months to one year. Prior to making an investment, an individual should do research regarding each fund to determine whether these factors apply.