It’s a great portfolio diversifier and is used to hedge against inflation and currency debasement. While holding gold in the physical form like jewellery, bars or coins is cumbersome, gold ETFs come in the dematerialised form and are closer to the market price of the metal. Expenses incurred in buying, selling or making gold jewellery is also more than gold ETFs. ETFs or Exchange-Traded funds are traded on the stock exchanges based on the value of the underlying asset. So if you are looking to profit from the incremental value of gold in the future, Gold ETF investment is a good option for you. A gold ETF is a type of Exchange Traded Fund that aims to track the price of domestic physical gold in the local market.

The i.e., Gold is one of the most precious metals whose value does not depreciate significantly. Similarly, when one wants to sell, one can capture the live gold prices, making it a win-win for the investor. Note that all gold ETFs are tracking the domestic gold index, the difference in returns within the category is due to tracking error which actually means the funds have diverted.

List of Best Gold Mutual Funds in India Ranked by Last 5 Year Returns

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It will help you understand how well its fund manager is able to manage the fund. Launched on 18 May 2009, the SBI gold exchange-traded fund is under the management of SBI Funds Management Ltd. This mutual fund’s investment strategy aims to generate wealth by investing in physical gold. A demat or trading account is not mandatory to purchase units of Gold Funds.

short term capital

Investment with less than three years of holding attracts short-term capital gains tax. While investments with a holding period of more than three years attract long-term capital gains tax. The long-term capital gains are taxable at 20% with indexation benefits.

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However, looking at the profiles of various ETF schemes on the basis of AUM, NAV and returns, one can arrive at deciding the scheme most profitable for you to invest in. With gold ETFs, short-term returns are higher than long-term returns. Net Asset Value – NAV is the value of the company’s assets except the value of its liabilities. NAV is arrived at by dividing the total value of all the securities in a firm’s portfolio, except the liabilities, by the number of outstanding fund shares. From April 1st 2023, Gold ETFs will no longer have the LTCG benefit.

SGBs have maturity period of 8 years or you can’t redeem it before completion of 5 years while ETFs have no lock in period. Costs & Expenses – When buying physical gold, storage is a matter of concern. When opting for facilities like a locker, there is an additional element of cost attached to it. Risk diversification is an essential aspect of asset allocation.

  • E) Trading / Trading in “Options” based on recommendations from unauthorised / unregistered investment advisors and influencers.
  • For the uninitiated, Gold ETFs are passive mutual funds that track the prices of physical gold.
  • Invesco India Gold Fund is a Gold – Gold fund was launched on 5 Dec 11.
  • ETFs are considered a safe investment option as they are issued electronically.

This gold exchange-traded fund was launched on 13 August 2010. It is under the management of HDFC Asset Management Company Ltd. and aims to generate capital based on the performance of gold. Assets under Management – AUM is defined as the market value of all the financial assets that a company manages for its investors. If a company has a high AUM value, it reflects on the high number of clients and portfolios that it handles. To invest in gold ETF, you need to have a Demat account and an online Trading Account.

Best Gold ETFs to Buy in India

Gold is useful for consumption in the form of jewellery and also is an asset that helps in hedging inflation and currency risk. For the purpose of investment, physical gold can be quite risky as it is prone to theft and involves storage and carrying costs. Like stocks, gold ETFs are also traded on the stock exchanges. So, it gives you a chance to track the prices of gold ETF and also enable you to sell these investments whenever you want. As can be seen from the above aspects, taking exposure to the yellow metal via Gold ETFs is one the most optimal and cost-efficient approaches. Hence, investors looking to add to gold allocation in their portfolio can consider doing so with the help of Gold ETFs.

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You can sell/redeem your gold ETF units by selling them on the listed stock exchange. You can place a sell order similar to stocks to redeem gold ETFs at a specific price or current domestic gold price. Time PeriodRate of returns (%)1-year4.53-year8.75-year10.4This mutual fund scheme may experience volatility in the short term. Thus, you should only invest in this scheme if you have a long-term investment goal.

Benefits of Gold Exchange Traded Funds

Since its launch on 10 November 2010, this mutual fund scheme has delivered a 6.6% return on investment. Gold ETFs are a good option for hedging your investment portfolio. Therefore, if your goal is to diversify your investments, hedge against inflation and protection from market volatility, Gold ETFs are a good option. Thus, assess the suitability of gold ETFs against your investment goals. A Gold ETF is a good choice as it helps you benefit from the potential appreciation of gold in a safe and convenient manner.

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When you accumulate gold, it may not be advisable to keep the same at home. But it bears some charges and after a certain point of time, it is possible you may not like to pay for the locker facility to continue. The price of physical gold changes continuously, and most times, the Net Asset Value of the ETF doesn’t reflect the same.

Best Gold ETFs in India

When you invest in Gold ETF, it is held in your Demat account along with your other financial securities like stocks, bonds etc. So there is no risk of theft or storage costs like, bank locker charges, etc. You can sell your Gold ETF at any time on the stock exchanges. Gold ETFs are the cheapest and safest way of buying and selling gold. Gold ETF price of all the AMCs who have Gold ETF fund is published on their websites on a daily basis.

  • So if you are looking to profit from the incremental value of gold in the future, Gold ETF investment is a good option for you.
  • While investments with a holding period of more than three years attract long-term capital gains tax.
  • Here, every unit of Gold ETF is backed by physical gold and offers the benefits of owning gold sans the hassles of managing it in physical form.

how to start investing for the first time Fund investments are subject to market risks, read all scheme related documents carefully. No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment.


Purity – The biggest concern while investing in Gold in any physical form is about ensuring the purity of Gold. Since each unit of gold ETF is backed by a physical gold with a purity of 99% or more, one need not worry about the purity aspect. As compared to physical gold, Gold ETF investment generates income through returns.They can also be used as collateral against loans. Are vulnerable to macroeconomic volatility but do not cause you heavy losses. These investments are regulated by the Security Exchange Board of India .