Gold ETF in India has got traction in the recent past in the Indian stock market. These are the funds traded same like individual stocks. In this type of investment, the investor will not get any physical gold in the vault. As the same is credited in the form of units/shares in the demat account.
So if you invest in the gold ETF, you actually don’t own the gold. Even when you sell the gold ETFs, you will not get the same as delivered to your home. Instead, you will get the cash amount in your demat account.
What is the Gold ETF?
As mentioned above, gold ETFs are the funds that deal only with Gold metal as a commodity. Here the interest of the buyer is not to own the physical metal but to get the benefit of price hike and thus earning profits from the investment.
Many times, Gold ETFs are used to diversify the investment portfolio. It is known as a debt asset class wherein the risk is low and so as the returns. It is used to gain exposure to fluctuations of gold price itself.
Gold ETFs are used as a hedge to protect the investment. Gold ETF is the simpler move if one wants to diversify the investment portfolio.
Best Gold ETF in India
There are currently 12 Gold ETFs schemes available on the NSE. The list of them is as below.
| Issuer | Name | Symbol | Launch Date |
| UTI Mutual Fund | UTI GOLD Exchange Traded Fund | GOLDSHARE | Mar 2007 |
| Kotak Mutal Fund | Kotak Gold Exchange Traded Fund | KOTAKGOLD | Jul 2007 |
| Reliance Mutual Fund | Reliance Gold Exchange Traded Fund | RELGOLD | Nov 2007 |
| Quantum Mutual Fund | Quantum Gold Fund (an ETF) | QGOLDHALF | Feb 2008 |
| SBI Mutual Fund | SBI Gold Exchange Traded Scheme | SBIGETS | Apr 2009 |
| HDFC Mutual Fund | HDFC Gold Exchange Traded Fund | HDFCMFGETF | Aug 2010 |
| ICICI Prudential Mutual Fund | ICICI Prudential Gold Exchange Traded Fund | IPGETF | Aug 2010 |
| Axis Mutual Fund | Axis Gold ETF | AXISGOLD | Nov 2010 |
| Birla Sun Life Mutual Fund | Birla Sun Life Gold ETF | BSLGOLDETF | May 2011 |
| IDBI AMC | IDBI Gold ETF | IDBIGOLD | Nov 2011 |
| Canara Robeco MF | Canara Robeco Gold ETF | CANGOLD | Mar 2012 |
Below is the data of gold ETF’s performance for the last 10 years. If you see the data below, you will find that there are 3 consecutive years where the returns of gold ETFs are negative. rest all the years the return is positive.
This current year (2019) so far the return on the ETFs are as high as 22% which is best so far.
Also Read: How to buy Gold via Google Pay?
List of best Gold ETFs in India
Now let’s check one by one the best gold ETF in India. We will go through the various factors while deciding the best gold ETF available in India for investment as portfolio diversification.
HDFC Gold Fund
HDFC is one of the best AMC when it comes to asset management. It has launched its gold fund in the year 2011 and below is the performance so far at various time intervals.
| Fund Name | Launch Date | AUM (Cr.) | Minimum Investment | Fund Manager | |||
| HDFC Gold Fund | 01.11.2011 | 233 | 5000 | Krishan Daga | |||
| Performance | YTD | 1-Month | 3-Month | 1-Year | 3-Year | 5-Year | 10-Year |
| Fund | 18.31 | 6.65 | 19 | 26.01 | 4.74 | 4.6 | – |
| Domestic Price of Gold | 22.89 | 8.95 | 23.71 | 32.48 | 6.36 | 6.68 | – |
| Category | 20.63 | 8.14 | 21.43 | 28.79 | 5.06 | 5.04 | – |
| Rank within Category | 19 | 19 | 18 | 19 | 16 | 15 | – |
| Number of funds in a category | 23 | 23 | 23 | 23 | 23 | 23 | – |
SBI Gold Fund
SBI Gold Fund was launched in the year 2011 with moderate-high risk. The fund has given 2.2% of return since its inception. Below are its performance and vital data points which will help you to choose the fund.
| Fund Name | Launch Date | AUM (Cr.) | Minimum Investment | Fund Manager | |||
| SBI Gold Fund | 12.09.2011 | 324 | 5000 | Raviprakash Sharma | |||
| Performance | YTD | 1-Month | 3-Month | 1-Year | 3-Year | 5-Year | 10-Year |
| Fund | 18.87 | 7.6 | 19.15 | 26.92 | 4.7 | 4.41 | – |
| Domestic Price of Gold | 22.89 | 8.95 | 23.71 | 32.48 | 6.36 | 6.68 | – |
| Category | 20.63 | 8.14 | 21.43 | 28.79 | 5.06 | 5.04 | – |
| Rank within Category | 16 | 14 | 17 | 16 | 17 | 20 | – |
| Number of funds in category | 23 | 23 | 23 | 23 | 23 | 23 |
Aditya Birla Sun Life Gold Fund
The investment objective of the scheme is to provide returns that track returns provided by Aditya Birla Sun Life Gold ETF.
| Fund Name | Launch Date | AUM (Cr.) | Minimum Investment | Fund Manager | |||
| Aditya Birla SL Gold fund | 13.05.2011 | 87 | 5000 | Lovelish Solanki | |||
| Performance | YTD | 1-Month | 3-Month | 1-Year | 3-Year | 5-Year | 10-Year |
| Fund | 22.15 | 8.83 | 23.38 | 31.23 | 5.31 | 5.64 | – |
| Domestic Price of Gold | 22.89 | 8.95 | 23.71 | 32.48 | 6.36 | 6.68 | – |
| Category | 20.63 | 8.14 | 21.43 | 28.79 | 5.06 | 5.04 | – |
| Rank within Category | 8 | 9 | 8 | 4 | 10 | 5 | – |
| Number of funds in category | 23 | 23 | 23 | 23 | 23 | 23 | – |
Reliance Gold Saving Fund
The investment objective of the Scheme is to seek to provide returns that closely correspond to returns provided by Reliance ETF Gold BeES.
| Fund Name | Launch Date | AUM (Cr.) | Minimum Investment | Fund Manager | |||
| Reliance Gold Saving Fund | 07.03.2011 | 680 | 100 | Mehul Dama | |||
| Performance | YTD | 1-Month | 3-Month | 1-Year | 3-Year | 5-Year | 10-Year |
| Fund | 18.12 | 6.39 | 18.87 | 25.92 | 4.58 | 4.27 | – |
| Domestic Price of Gold | 22.89 | 8.95 | 23.71 | 32.48 | 6.36 | 6.68 | – |
| Category | 20.63 | 8.14 | 21.43 | 28.79 | 5.06 | 5.04 | – |
| Rank within Category | 20 | 22 | 20 | 20 | 18 | 22 | – |
| Number of funds in category | 23 | 23 | 23 | 23 | 23 | 23 | – |
Kotak Gold Fund
The investment objective of the scheme is to generate returns by investing in units of Kotak Gold Exchange Traded Fund.
| Fund Name | Launch Date | AUM (Cr.) | Minimum Investment | Fund Manager | |||
| Kotak Gold Fund | 27.07.2007 | 394 | 5000 | Abhishek Bisen | |||
| Performance | YTD | 1-Month | 3-Month | 1-Year | 3-Year | 5-Year | 10-Year |
| Fund | 22.32 | 8.88 | 23.52 | 31.34 | 5.32 | 5.59 | 8.8 |
| Domestic Price of Gold | 22.89 | 8.95 | 23.71 | 32.48 | 6.36 | 6.68 | 9.93 |
| Category | 20.63 | 8.14 | 21.43 | 28.79 | 5.06 | 5.04 | 8.83 |
| Rank within Category | 3 | 3 | 3 | 3 | 9 | 7 | 5 |
| Number of funds in category | 23 | 23 | 23 | 23 | 23 | 23 | 5 |
How to Invest in Gold ETF in India?
Gold ETFs are a simple investment product and is used as portfolio diversification. One can trade in ETF funds in the cash market of NSE (National Stock Exchange) same like any other company’s stock.
For trading in ETF, one needs to have a demat account through which the transactions takes place. The units of the ETF funds are getting credited to your demat account when you buy the Gold ETF and debited from your demat account when you sell it in the market.
For opening a demat account, you need a PAN card, address proof, and ID proof. Once the account is opened, you can place the order for purchasing Gold ETF on the exchange. Once the order is executed, the confirmation will be sent to you. There is a small brokerage charge levied on the transaction by the broker.
Should you invest in Gold ETF in India?
Most people lose their money while making it more complicated. Invest in gold ETFs only if you are ok with the low returns.
Here before investing in gold ETF, you need to decide the objective of investment. It could be anything from gaining returns, portfolio diversification, as a piece of jewelry, looking for a fix returns and so on.
If your objective is for investment and the horizon is for more than five years, you probably can think of investing in gold ETFs. Else it doesn’t make sense to invest into gold ETFs as they are generating low returns investment avenue.
There are some special days when buying gold is considered as good luck, these days are Dhanteras, Akshay Tritiya. On such days the gold price is usually much higher than the rest of the days. So if you want to buy gold as an investment, you should not buy gold on these special days.
The unit of ETF actually represents some units of the gold, but the underlying unit is always diminishing with the time due to insurance, inventory cost, etc. Hence you will see the Gold ETFs are traded on the exchanges with the different prices by fund houses. You will never get the physical gold in ETF. It will always remain in the unit form in your demat account.
Gold ETF vs Physical Gold
Let’s quickly look at the comparison between Gold ETF and physical gold.
Gold ETF
- ETF represents the future profitability of gold producers
- Gold ETFs are more volatile
- Gold ETFs can earn returns on the investment
- Gold ETFs has a unit value
- It cannot be stolen as it is in the form of a unit in demat account
- There is no trust issue on the units purchased as gold ETF
- The Investor needs to have a demat account for buying/selling gold ETFs
- Gold ETFs are constant, there is no premium like making charges
- No wealth tax is applicable on gold ETF
- You don’t have to pay any storage cost since it is available in the form of units
- Buying/Selling gold ETF is very easy as you can do it on the exchange easily
- One can not use ETFs for personal use
Physical Gold
- Physical gold represents the price of the gold
- Physical gold price is stable
- Physical gold is an asset which earns no interest
- Physical gold doesn’t have any utility value
- It can be stolen
- There can be a trust issue in terms of the quality of the physical gold
- No demat account is needed to buy physical gold
- In physical gold, you need to pay “making charges” as an additional cost over the price of the gold
- You have to pay 1% as a wealth tax if the value of the physical gold is higher than Rs. 30 lakhs
- If you store physical gold in a locker, you will have to pay rent for that locker
- You can buy/sell the physical gold only at the jewelers
- Physical gold can be used as a personal use
Everything that glitter is not gold
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