Best Gold ETFs in India

What is Gold ETFs?

Gold exchange-traded funds (ETFs) are financial products that, like shares, trade on stock exchanges like the NSE and keep you ahead of the curve on gold performance. When you purchase a gold ETF, you are essentially purchasing both gold and a representation of a certain quantity of gold. This way, you can gain exposure to gold price fluctuations without purchasing physical gold.

Gold ETFs offer a simple and affordable way to invest in the yellow metal, which is often considered a safe-haven asset during turbulent times. Investing in the top gold ETFs in India can add stability to your portfolio.

Best Gold ETFs

Overview of Gold ETFs in India

Gold Exchange-Traded Funds (ETFs) provide a way for investors to invest in gold without holding the physical asset. They track the price of gold and are traded on stock exchanges. Gold ETFs offer a transparent, cost-effective, and liquid way to gain exposure to the gold market, providing diversification to a portfolio with minimal expense ratios. The following analysis covers the top gold ETFs in India based on a 5-year Compound Annual Growth Rate (CAGR).

Gold ExchangeTraded Funds (ETFs) provide a way for investors to invest in gold without holding the physical asset. They track the price of gold and are traded on stock exchanges. Gold ETFs offer a transparent, costeffective, and liquid way to gain exposure to the gold market, providing diversification to a portfolio with minimal expense ratios. The following analysis covers the top gold ETFs in India based on a 5year Compound Annual Growth Rate (CAGR).
  

1. IDBI Gold Exchange Traded Fund

The IDBI Gold ETF leads in 5year CAGR with a low expense ratio of 0.1%, making it one of the most costefficient options for investors looking to maximize returns with minimal costs.

 2. Axis Gold ETF

Axis Gold ETF offers a solid 5year CAGR of 13.24%, with an expense ratio of 0.53%. It’s an attractive option for investors seeking good returns with moderate expense efficiency.

3. Invesco India Gold Exchange Traded Fund

With a slightly lower CAGR and higher expense ratio, the Invesco India Gold ETF provides stable growth, making it a viable option for those prioritizing consistent performance.

4. Aditya BSL Gold ETF

The Aditya BSL Gold ETF offers good growth at 13.18% CAGR and a competitive expense ratio, appealing to investors looking for stable returns with manageable costs.

5. ICICI Prudential Gold ETF

One of the largest in terms of market cap, ICICI Prudential Gold ETF provides a balance of growth and costeffectiveness, with a competitive CAGR and midrange expense ratio.

6. SBI Gold ETF 

SBI Gold ETF combines a high market cap with stable returns and a slightly higher expense ratio, ideal for longterm investors comfortable with moderate costs.

7. HDFC Gold Exchange Traded Fund

HDFC’s Gold ETF shows slightly lower returns but has the backing of a trusted brand, offering investors reliable growth with reasonable fees.

8. Nippon India ETF Gold BeES

With the highest market cap in the list, Nippon Gold BeES is ideal for largescale investors seeking stability, although its higher expense ratio may affect returns. 

 9. UTI Gold Exchange Traded Fund

UTI Gold ETF offers balanced growth with a low expense ratio, making it an attractive choice for costconscious investors looking for moderate gains.

10. Quantum Gold Fund

Quantum Gold Fund provides steady growth and is ideal for investors seeking smaller, consistent returns despite a higher expense ratio compared to peers.

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

Benefits of Gold ETFs

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 bought 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

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.

Who Should Invest in Gold ETFs?

Busy Professionals: Ideal for those who prefer digital investments.

First-Time Investors: Offers a convenient way to start investing in gold.

Long-Term Investors: Provides stability against market volatility.

Retirement Planners: Adds a safe-haven asset to retirement plans.

Portfolio Diversifiers: Balances portfolios with non-correlated assets.

Taxation of Gold ETFs

Understanding the tax implications of Gold ETFs is essential for effective financial planning. In India, Gold ETFs are governed by specific tax laws based on the holding period:

Short-Term Capital Gains (STCG): If sold within three years, gains are taxed as per your income tax slab rate.

Long-Term Capital Gains (LTCG): Held for over three years, taxed at 20% with indexation benefits, which helps reduce taxable gains.

Dividend Income: Though rare, dividends are added to your income and taxed accordingly.

Conclusion

Gold ETFs are a convenient way to diversify a portfolio by tracking the gold market. Popular options include SBI Gold ETF, Nippon India ETF Gold BeES, and HDFC Gold ETF. With accessible trading on stock exchanges, Gold ETFs make investing in gold easier for various financial goals.