Best Gold ETFs in India

Gold is significant in India.  The yellow metal is not only seen as fortunate, but many households also choose it as their preferred investment option.  In the past, investing in gold required physically buying and holding the precious metal.  But now that gold exchange-traded funds (ETFs) are readily available, investing in gold has become simpler.  This article will teach us which gold exchange-traded funds (ETFs) are the best and what to consider before investing.

Gold ETFs provide an easy and cost-effective way to invest in gold without the hassle of physical storage. Investors can buy and sell Gold ETF units on stock exchanges, offering liquidity and transparency. If you're looking for the best Gold ETF to invest in, this guide covers essential details, including the best gold ETFs in India.

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Best Gold ETFs in India (2025)

Here are some of India's top gold ETFs based on the annualized return (as of April 22, 2025).

A basket of securities that includes stocks, bonds, and commodities and is traded on stock markets is known as an exchange-traded fund, or ETF.  The ETF monitors and compares its performance to that of a commodity or underlying index.

A vehicle that holds gold futures and bullion is known as a gold exchange-traded fund (ETF).  A gold exchange-traded fund (ETF) is a passively managed fund whose goal is to replicate the performance of real gold.  For instance, the value of the gold ETF will rise by 1% if the price of gold rises by 1%.

Overview of the Best Gold ETFs in India in 2025

Gold Exchange-Traded Funds (ETFs) track gold prices and offer an alternative to physical gold investment. They are traded on stock exchanges like shares, allowing investors to participate in gold price movements with minimal costs. Gold ETFs provide portfolio diversification, hedge against inflation, and serve as a safe-haven asset during market uncertainties. The following analysis highlights the best Gold ETFs in India based on their Compound Annual Growth Rate (CAGR).

1. The Nippon India ETF Gold BeES: Introduced in 2007, the Nippon India ETF Gold BeES provides investors with an easy and transparent way to invest in gold by tracking the price of actual gold. In the Indian market, it is among the most well-liked gold exchange-traded funds.

2. SBI Gold ETF: Founded in 2009, the SBI Gold ETF provides investors with an effective and affordable way to get exposure to the global gold ETF market by reflecting the price of gold in India.

3. Kotak Gold ETF: Founded in 2007, Kotak Gold ETF offers investors a way to purchase gold through an exchange-traded fund (ETF). The goal of the fund is to closely resemble domestic gold market returns.

4. HDFC Gold Exchange Traded Fund: Founded in 2010, the HDFC Gold ETF allows investors to purchase gold without having to store it in physical storage. The fund's goal is to monitor India's gold price.

5. UTI Gold Exchange Traded Fund: Introduced in 2007, the UTI Gold ETF allows investors to purchase gold by simulating its domestic price. The fund's goal is to offer gold ETF returns that closely match the price of real gold.

Each ETF has unique strengths based on growth potential, cost efficiency, and market positioning, offering various choices for investors based on their financial goals.

Advantages of Gold ETFs

• There are several advantages to investing in the best gold ETFs, some of which are:
• Stored digitally in your Demat account, so there are no storage or theft concerns.
• Highly liquid, allowing you to buy and sell as needed.
• Can be purchased in units, making them accessible for any budget.
• Serve as a buffer against market volatility.
• No entry or exit loads.
• ETFs can be used as collateral for loans.

Disadvantages of Gold ETFs

• Before investing in gold ETFs,there are also several disadvantages that you should be aware of:
• Gold price fluctuations can impact investment value.
• ETF returns may not precisely match the gold price.
• Low trade volumes may limit large transactions.
• Management costs can reduce returns.
• Only digital ownership, not physical gold.
• Exchange rates can affect foreign gold ETFs.

Factors to Consider Before Investing in Gold ETF

• Gold ETF Expense Ratio: Choosing a cheap gold ETF can help you maximise your gains over time because the expense ratio directly impacts your results.  Particularly in the long run, even a slight variation in expenditure ratios can greatly affect gold investment funds.
• Liquidity: High liquidity makes it simple to acquire or sell your Gold ETF units without impacting the market price. To prevent problems with gold ETF liquidity, selecting one of the best gold bees in India that is actively traded on the market is critical.
• Taxation of Gold ETFs: Understand how gold ETFs are treated tax-wise in India. Short-term profits are subject to your income slab, while long-term gains are subject to 20% taxation with indexation benefits. If you are aware of these tax advantages and other ramifications, you may more efficiently plan your gold ETF investment strategy.
• No Physical Storage: You may avoid the risks and expenses of storing physical gold because digital gold-backed ETFs are stored digitally.  Because of this, digital Gold ETFs are a practical choice for anyone who would rather avoid the difficulties involved in protecting and insuring tangible valuables.  This feature can be decisive for many investors when comparing gold ETFs in India.
• Tracking Error: An ETF that closely tracks gold price swings and ensures that your returns reflect the real gold price has a low gold ETF tracking error.  For investors seeking precise gold price tracking, the gold ETF with the lowest tracking error in India is the best choice.  ETFs with high tracking errors should be avoided since they could produce less than anticipated returns.
• Investment Horizon: You can profit from the possible long-term increase in gold prices by investing in India's best gold exchange-traded fund (ETF), which is generally appropriate for medium- to long-term investment horizons.  Before investing, carefully assess the state of the market if you have a short-term focus.

Conclusion

Factors like liquidity, expense ratio, and tracking accuracy are essential considerations for those wondering which is the best gold ETF in India. Gold ETFs like SBI Gold ETF and Nippon India ETF Gold BeES offer a convenient way to invest in gold without the hassle of physical storage. As a safe-haven asset, gold ETFs help in portfolio diversification and wealth preservation over time. However, it is important to conduct thorough research, consider the risks, and compare different ETFs before making an investment decision that aligns with your financial goals.