One, there is no risk of holding physical gold (eliminated the risk of theft) as GETFs are issued in demat form. Two, GETFs are easily affordable - retail investors can even buy just one unit from the exchange. Third, GETFs have high liquidity as they can be easily bought/sold like any other stock on the exchange with transparency in prices.
GFoFs are open ended fund of fund schemes intended for the investors who do not have a demat account. Their objective is to provide returns that closely correspond to returns provided by the underlying exchange traded funds. The asset allocation of a GFoF is typically 95-100% in gold and 0-5% in money market instruments or gold mining companies. GFoF offers the flexibility of SIPs via mutual funds; thus, investors can invest a fixed sum of money regularly and benefit from rupee cost averaging. There is no exit load and the fund house may levy exit load if redeemed within one year. In case the investor wants to redeem the fund, he/she can do at any time at the applicable NAV. GFoFs basically act as feeder funds aiming to attract investments in GETFs.