10 Best Gold Mutual Funds to Invest in India – With Returns (2023)
Gold Mutual Funds are funds that invest in gold and gold-related assets such as bullion, coins, etc. It is a gold investment instrument that is not controlled by the government and allows individuals to invest in physical gold without the hassle of purchasing it physically. In India, these mutual funds invest in units of a gold ETF (Exchange-Traded Fund). If you’re considering investing in gold mutual funds, here’s a list of 10 best gold mutual funds in India you can invest in this year.
10 Best Gold Mutual Funds in India – Top Performing
| Name of the Gold Fund | Features |
| Invesco India Gold Fund- Direct Plan (Growth) | NAV: ₹17.33 Expense Ratio: 0.16% AUM: ₹56.41 Cr |
| SBI Gold Fund- Direct Plan (Growth) | NAV: ₹17.93 Expense Ratio: 0.1% AUM: ₹1241.95 Cr |
| HDFC Gold Fund- Direct Plan | NAV: ₹18.39 Expense Ratio: 0.18% AUM: ₹1367.07 Cr |
| Kotak Gold Fund- Direct Plan (Growth) | NAV: ₹23.84 Expense Ratio: 0.18% AUM: ₹1376.31 Cr |
| Axis Gold Fund- Direct Plan (Growth) | NAV: ₹18.68 Expense Ratio: 0.17% AUM: ₹280.27Cr |
| Nippon India Gold Savings Fund- Direct Plan (Growth) | NAV: ₹23.62 Expense Ratio: 0.19% AUM: ₹1431.38 Cr |
| Quantum Gold Savings Fund- Direct Plan | NAV: ₹22.50 Expense Ratio: 0.06% AUM: ₹82.02 Cr |
| IDBI Gold Fund- Direct Plan (Growth) | NAV: ₹16.04 Expense Ratio: 0.26% AUM: ₹41.9 Cr |
| ICICI Prudential Regular Gold Savings Fund (FoF)- Direct Plan (Growth) | NAV: ₹18.83 Expense Ratio: 0.09% AUM: ₹648.02 Cr |
| Aditya Birla Sun Life Gold Fund- Direct Plan (Growth) | NAV: ₹17.78 Expense Ratio: 0.15% AUM: ₹270.86 Cr |
*Disclaimer: Mutual fund investment is subject to market risk, read all scheme-related documents carefully.
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Best Performing Gold Mutual Funds in India 2023 – Detailed Overview
1. Invesco India Gold Fund – Direct Plan (Growth)
Invesco India Gold Fund is one of the best mutual funds, appropriate for investors seeking steady returns and long-term capital growth. A Fund of Funds scheme that primarily invests in Invesco India Gold Exchange Traded Fund (ETF) units in order to offer returns that are closely correlated with gold prices because Invesco India Gold ETF invests in physical gold. Let’s check more details about the fund.
- NAV: ₹17.33
- Expense Ratio: 0.16%
- AUM: ₹56.41 Cr
- Risk: High Risk
- Min Investment:
- SIP: ₹1000
- Lump Sum: ₹1500
- 3 Year Returns: 11.08%
- 5 Year Returns: 12.93%
2. SBI Gold Fund – Direct Plan (Growth)
SBI Gold Fund seeks to provide capital growth with the use of investments in a gold-focused fund. This scheme invests in SBI ETF Gold, an exchange-traded fund that tracks the price of gold, and generates return for capital gains. Here are the scheme details
- NAV: ₹17.93
- Expense Ratio: 0.1%
- AUM: ₹1241.95 Cr
- Risk: High Risk
- Min Investment:
- SIP: ₹1000
- Lump Sum: ₹500
- 3 Year Returns: 10.79%
- 5 Year Returns: 12.67%
3. HDFC Gold Fund – Direct Plan
HDFC Gold Fund (Growth) seeks capital appreciation through the purchase of HDFC Gold Exchange Traded Fund units (HGETF) and to achieve its investment objective, the scheme will put most of its money into HGETF units. Here are additional details about the fund.
- NAV: ₹18.39
- Expense Ratio: 0.18%
- AUM: ₹1367.07 Cr
- Risk: High
- Min Investment:
- SIP: ₹100
- Lump Sum: ₹100
- 3 Year Returns: 11.11%
- 5 Year Returns: 12.66%
4. Kotak Gold Fund- Direct Plan (Growth)
Kotak Gold Fund is one of the best gold mutual funds because it is an open ended fund of fund scheme that invests in units of Kotak Gold Exchange Traded Fund). It is appropriate for investors seeking returns comparable to physical gold over the medium to long term and also suitable for investment in Kotak Gold ETF. Here are more details about the scheme.
- NAV: ₹23.84
- Expense Ratio: 0.18%
- AUM: ₹1376.31 Cr
- Risk: High Risk
- Min Investment:
- SIP: ₹1000
- Lump Sum: ₹5000
- 3 Year Returns: 10.68%
- 5 Year Returns: 13.03%
5. Axis Gold Fund- Direct Plan (Growth)
AXIS GOLD FUND is an open ended fund of fund scheme investing in Axis Gold ETF. This product is suitable for investors who are seeking capital Appreciation over the medium to long term. Let’s check more details about this scheme.
- NAV: ₹18.68
- Expense Ratio: 0.17%
- AUM: ₹280.27Cr
- Risk: High Risk
- Min Investment:
- SIP: ₹1000
- Lump Sum: ₹5000
- 3 Year Returns: 11.25%
- 5 Year Returns: 13.21%
6. Nippon India Gold Savings Fund- Direct Plan (Growth)
Nippon India Gold Savings Fund uses a strategy for investing that is intended to monitor the performance of Nippon India ETF Gold BeES. By purchasing Nippon India ETF Gold BeES, the Scheme aims to accomplish this objective. Here are more details about this scheme.
- NAV: ₹ 23.62
- Expense Ratio: 0.19%
- AUM: ₹1431.38 Cr
- Risk: High Risk
- Min Investment:
- SIP: ₹100
- Lump Sum: ₹100
- 3 Year Returns: 10.64%
- 5 Year Returns: 12.34%
7. Quantum Gold Savings Fund- Direct Plan
The Quantum Gold Savings Fund (QGSF) is one of the best gold mutual funds, which invests in units of the Quantum Gold Fund – an Exchange Traded Fund (QGF) that further invests in physical gold. Let’s check more details about this Fund.
- NAV: ₹22.50
- Expense Ratio: 0.06%
- AUM: ₹82.02 Cr
- Risk: High Risk
- Min Investment:
- SIP: ₹500
- Lump Sum: ₹500
- 3 Year Returns: 10.62%
- 5 Year Returns: 12.37%
8. IDBI Gold Fund- Direct Plan (Growth)
IDBI Gold Fund is one of the best gold mutual funds, and its investing goal is to produce results that closely resemble those of the IDBI Gold Exchange Traded Fund. This product is appropriate for investors looking to duplicate the returns of the IDBI Gold ETF over at least a medium time horizon and with investments in IDBI Gold ETF units, money market instruments, or the IDBI Liquid Fund Scheme. Here’s more information about this fund.
- NAV: ₹16.04
- Expense Ratio: 0.26%
- AUM: ₹41.9 Cr
- Risk: High Risk
- Min Investment:
- SIP: ₹500
- Lump Sum: ₹5000
- 3 Year Returns: 10.82%
- 5 Year Returns: 12.18%
9. ICICI Prudential Regular Gold Savings Fund (FoF)- Direct Plan (Growth)
ICICI Prudential Regular Gold Savings Fund (the Plan) is a fund of funds scheme with the main objective of offering investment returns that closely resemble the returns of the underlying Goldlinked schemes. For investors looking for a long-term wealth growth option, this product is appropriate. Let’s check more details about the fund.
- NAV: ₹18.83
- Expense Ratio: 0.09%
- AUM: ₹648.02 Cr
- Risk: High Risk
- Min Investment:
- SIP: ₹100
- Lump Sum: ₹100
- 3 Year Returns: 10.94%
- 5 Year Returns: 12.61%
10. Aditya Birla Sun Life Gold Fund- Direct Plan (Growth)
Aditya Birla Sun Life Gold Fund’s main objective is to deliver returns that correspond to those of the Aditya Birla Sun Life Gold ETF. Ideal for investors who want consistent returns with the long-term performance of Aditya Birla Sun Life Gold ETF (ABSL GETF) and who invest primarily in units of that ETF. Here are important details about the scheme.
- NAV: ₹17.78
- Expense Ratio: 0.15%
- AUM: ₹270.86 Cr
- Risk: High Risk
- Min Investment:
- SIP: ₹100
- Lump Sum: ₹1000
- 3 Year Returns: 10.89%
- 5 Year Returns: 12.40%
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How Gold Mutual Funds Work?
Gold funds invest in various forms of gold, including the physical commodity and stocks of gold mining companies. In India, such open-ended funds invest indirectly in the physical form of the metal through gold ETFs. These are exchange-traded funds investing in a range of gold-based securities. The fund manager of these funds is responsible for making investment decisions as per its financial objectives. Its returns closely reflect the performance of gold ETFs, which is influenced by the prices of this commodity in the market.
Example:
The fund manager of a gold mutual fund collects money from various investors. This fund is then invested in gold ETFs. The fund manager of the Gold ETF will then purchase physical gold and store it in the custodian’s vaults. Investors can redeem their units at the domestic gold price when they reach maturity.
Benefits of Investing in Gold Mutual Funds
1. Protection Against Market Downturns
The movement of gold and stock markets are inversely proportional. When the equity markets fall, investors turn to this commodity as a safe haven. As a result, gold prices increase. This makes gold funds best for protection against market downturns.
2. Hedge Against Inflation
Inflation refers to the increase in prices of goods and services for a certain period. Gold acts as a hedge against inflation as its value rises with an increase in inflation.
3. Higher Liquidity
Gold mutual funds have higher liquidity than physical gold. You can sell gold mutual funds only to jewellers at a discount to market rates. Gold funds are also more liquid compared to gold ETFs for which you have to wait for a buyer.
4. Valuable Asset
Gold has retained its high value over many years. Though it does not offer very high returns, gold is a stable investment offering moderate returns in long periods.
How to Invest in Gold Mutual Funds?
Invest in gold mutual funds following these simple steps:
- Step 1: Long in to AMC website or sign in with any investment app
- Step 2: Select the funds you want to invest in
- Step 2: Complete required KYC
- Step 4: Link your bank account
- Step 5: Start Investing now in your most preferred gold fund amongst the hand-picked ones!
Who Can Invest in Gold Mutual Funds?
- Conservative investors may want to invest in these funds as they are generally insulated from market fluctuations.
- Investors looking to diversify their investment portfolio may prefer these funds.
- These are suitable for investors who want exposure to gold without the hassles of storing precious metal.
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Factors to Consider before Investing in Gold Mutual Funds
Before investing in a gold fund, you may want to look at the following factors:
1. Returns
The returns from gold funds are pegged to the value of gold, which can rise or fall on any given day. Moreover, these funds generally tend not to deliver exceptional returns. It does offer higher returns during periods of insecurity in the market.
2. Risk Appetite
Gold funds offer stable returns and help to diversify the overall risks of a portfolio. However, returns are not guaranteed and are subject to market fluctuations. Investors must look at their risk appetite before investing in such mutual funds.
3. Past Performance
Before selecting the best gold funds, you may want to take a look at the fund’s past performance. Check if it has provided higher returns than the physical commodity and compare it to the performance of other funds.
4. Expense Ratio
This is an annual fee charged as a percentage of a fund’s NAV (Net Asset Value) by the fund house for operating and managing a mutual fund. To pick the best gold funds, you may want to look for the lowest expense ratio as it would allow you to earn higher returns.
5. Direct/Regular Plan
AMCs (Asset Management Companies) offer direct plans while intermediaries and distributors such as banks, NBFCs and financial advisors offer regular plans. Direct plans come with the benefit of a lower expense ratio as they carry no commissions or brokerage fees.
Taxability of Gold Mutual Funds
Capital gains from the redemption of gold mutual funds are subject to the same taxes as gold jewellery. If you sell your fund units before three years, short-term capital gains (STCG) tax will be applicable. For a longer holding period, long-term capital gains (LTCG) tax will apply to it.
In the case of STCG, the capital gains will be added to the investor’s gross income and taxed as per his/her applicable income tax slab rates. For LTCG, they are taxed at a flat 20% rate with a 4% cess and indexation benefits.
Final Word
Gold mutual funds are a relatively new method of investing without having to physically hold precious metals. Higher liquidity, protection against market downturns, etc. are important benefits of investing in gold mutual funds. It is also a great way to diversify your investment portfolio. Before investing check out these 10 best gold mutual funds.
*Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
FAQs
Ans: 1. Gold fund of funds (FoF): These invest in various gold ETF funds.
2. Gold mining funds: Such gold funds invest in stocks of gold mining companies.
3. Gold ETFs: These are exchange-traded funds that track the domestic price of physical gold (in bullion).
Ans: Gold ETFs are listed in the cash segment of NSE and BSE, just like any company share. Each unit of a gold ETF represents one gram of pure gold and is backed by physical gold. When you sell a unit of gold ETF, you will receive the cash equivalent and not the physical gold.
Ans: The commodity gold usually displays seasonal behaviour, delivering higher returns during bear market phases and lower returns in bull markets. Thus, many investors allocate a higher portion to these funds during market downturns. Conversely, they shift their investment to equities as the market recovers.
Ans: Gold funds offer relatively low returns compared to other asset classes when the market performs well. That is why these are not ideal for a small or medium-sized portfolio. Conversely, for a large-sized portfolio, it is easy to allocate a small amount as a risk cover.
Ans: Reserve Bank of India’s Sovereign Gold Bonds (SGB) offer tax-free returns provided that you remain invested for eight years. These offer a 2.5% interest p.a over the actual price of gold. Capital gains taxes and TDS are not applicable when redeeming the bonds after maturity.
Ans: The use of gold funds can significantly lower investment risk and diversify portfolios. The market is governed and regulated by the Securities and Exchange Board of India (SEBI), which lowers the risk associated with investing in mutual funds.
Ans: In common with other gold investment avenues, gold ETFs and Fund of Funds are currently subject to capital gains taxes: short-term capital gains are taxed at a marginal rate with holding periods up to three years, and long-term capital gains are taxed at 20% with an indexation benefit for holding periods longer than three years.
Ans: The experts advise that investing in gold mutual funds is moderately risky. This is so because real-time gold prices, which are impacted by market volatility, serve as the collateral for gold mutual funds. Consequently, it is challenging to predict whether it will produce positive effects or not.
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Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
