Best Gold Mutual Funds to Invest in India

Gold has always been a trusted investment choice in India. It acts as a safe haven during market volatility and helps balance an investment portfolio. Gold mutual funds offer a convenient way to invest in gold without the need to physically buy and store it. These funds invest primarily in gold exchange-traded funds (ETFs) and track the price movements of gold. 

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For investors looking to diversify their portfolios or protect their wealth against inflation, gold mutual funds are an ideal option. They are managed by professional fund managers and offer liquidity, transparency, and ease of investment through systematic investment plans (SIPs). In this article, we explore some of the best gold mutual funds in India, helping you choose the right option to add stability and security to your investment journey.
 

What are Gold Mutual Funds?

Gold mutual funds are investment schemes that primarily invest in gold exchange-traded funds (ETFs) and aim to track the price of gold. They do not invest in physical gold directly but gain exposure through ETFs linked to gold prices. These funds offer investors an easy and cost-effective way to include gold in their portfolios without the need for buying, storing, or insuring physical gold. 

Gold mutual funds are managed by professional fund managers and can be bought and sold just like any other mutual fund scheme. They are ideal for those who want to hedge their investments against inflation, currency fluctuations, and market uncertainties. Investors can also choose systematic investment plans (SIPs) in gold mutual funds to build their holdings gradually over time.
 

Overview of Best Gold Mutual Funds to Invest in India

SBI Gold Fund

SBI Gold Fund is one of the largest gold mutual funds with ₹3,582 crores under management. Launched in January 2013, it offers a simple way to invest in gold at a low expense ratio of 0.1%. Over the last year, it delivered a strong return of 28.59%, with a consistent performance across 3 and 5 years.

LIC MF Gold ETF FoF

LIC MF Gold ETF FoF, with an AUM of ₹104 crores, provides exposure to gold prices with high liquidity. Established in 2013, it offers competitive returns of 29.3% over the past year. It maintains a low expense ratio of 0.2% and charges a 1% exit load if redeemed within 1 year.

HDFC Gold ETF Fund of Fund

HDFC Gold ETF Fund of Fund has ₹3,558 crores of assets and follows the domestic price of gold as its benchmark. Established in 2013, it shows a solid one-year return of 29.1%. It has a relatively low expense ratio of 0.18%, making it a popular choice for long-term gold investors.

Aditya Birla Sun Life Gold Fund

Aditya Birla Sun Life Gold Fund manages ₹555 crores in assets and offers easy access to gold investment. It achieved a one-year return of 27.75% and has been consistently tracking gold price movements. It charges a low expense ratio of 0.2% and provides flexibility through SIPs and lump sum investments.

ICICI Prudential Regular Gold Savings Fund

ICICI Prudential Regular Gold Savings Fund, with ₹1,909 crores in AUM, is a strong option for gold exposure. It achieved a 1-year return of 29.23% and offers one of the lowest expense ratios at 0.09%. With high liquidity and systematic investing options, it suits both new and experienced investors.

Axis Gold Fund

Axis Gold Fund holds ₹944 crores in AUM and has shown stable returns, with a 1-year performance of 28.55%. With a moderate expense ratio of 0.17%, the fund provides simple access to gold investing for risk-averse investors looking to diversify their portfolios.

Quantum Gold Savings Fund

Quantum Gold Savings Fund, with ₹181 crores in assets, focuses on cost efficiency with one of the lowest expense ratios at 0.03%. It delivered a 29.12% one-year return. With no exit load and easy investment options, it is ideal for small and first-time investors wanting gold exposure.

Invesco India Gold ETF FoF

Invesco India Gold ETF FoF manages ₹142 crores and offers a strong 1-year return of 28.55%. With a competitive expense ratio of 0.1% and no exit load, it is a practical option for investors seeking steady gold-linked returns through mutual funds.

Nippon India Gold Savings Fund

Nippon India Gold Savings Fund manages ₹2,744 crores and provides easy access to the gold market. Despite a moderate expense ratio of 0.13%, it posted a solid 28.77% one-year return. It is a good choice for investors looking for stability and inflation protection.

Kotak Gold Fund

Kotak Gold Fund, managing ₹2,835 crores, offers a 1-year return of 28.66%. It has a moderate expense ratio of 0.16% and is benchmarked to the domestic price of gold. It suits investors seeking to diversify with a reliable gold investment option.
 

Performance List of Best Gold Mutual Funds in India

How to Find The Best Gold Mutual Funds?

• Track Record

Choose funds with a consistent performance history over different market cycles, showing stability during both highs and lows.

• Expense Ratio

Look for funds with a lower expense ratio. Lower costs can help improve your overall returns over time.

• Fund Manager Expertise

Check the experience and track record of the fund manager. Skilled management ensures better handling of market risks.

• Underlying Gold ETF Quality

Make sure the gold mutual fund invests in high-quality gold ETFs that closely track the market price of gold.

• Liquidity

Select funds that offer easy redemption and have sufficient trading volumes to avoid delays when you sell.

• Asset Size

A reasonably large fund size indicates investor trust and helps maintain better fund management practices.

• Investment Horizon

Choose funds that match your financial goals and time frame, whether short-term protection or long-term wealth preservation.
 

Why Should You Invest in Gold Through Mutual Funds?

Investing in gold through mutual funds offers several benefits over absolute gold ownership:

●    Professional Management: Gold mutual funds are handled by experienced fund managers who study and deal with gold and gold-related products.
●    Diversification: Gold mutual funds provide diversification benefits by investing in a basket of gold-related assets, lowering the risk of investing in a single asset.
●    Cost-effectiveness: Investing in gold mutual funds removes the need for physical storage, insurance, and other costs involved with having actual gold.
●    Liquidity: Gold mutual fund units can be easily bought or sold, allowing investors to access their capital as needed.
●    Convenience: Gold mutual funds offer a simple way to gain exposure to gold without the trouble of directly keeping or saving the valuable metal.

Benefits of buying on Best Gold Mutual Funds

Investing in the best gold mutual funds in India 2024 can offer several benefits:

●    Diversification: Gold is often considered a safe-haven asset and can help broaden an investment strategy, offering a hedge against market instability and economic unpredictability.
●    Potential for capital appreciation: Gold prices tend to rise during economic turmoil, inflation, or international issues, offering the potential for capital appreciation.
●    Liquidity: Gold mutual funds offer liquidity, allowing buyers to buy or sell units with ease, unlike actual gold, which can be more challenging to trade.
●    Professional management: Experienced fund managers handle the selection and management of gold-related products, giving buyers professional knowledge.
●    Affordable investment: Gold mutual funds allow investors to gain exposure to gold with a relatively small investment amount, making it an easy choice for various investor types.

Factors to Consider Before Investing in Best Gold Mutual Funds

Before buying the best gold mutual funds, it's essential to consider the following factors:

●    Investment objective: Determine your investment goals and ensure that the gold mutual fund fits your aims, whether capital growth, variety, or a hedge against inflation.
●    Risk tolerance: Gold prices can be volatile, and gold mutual funds may experience changes in their yields. Assess your risk level and spend appropriately.
●    Investment horizon: Gold investments are usually suitable for long-term buyers, as short-term price changes can impact profits. Determine your financial plan and choose a fund that fits your time frame.
●    Expense ratio: Compare the expense ratios of different gold mutual funds to ensure you're not paying excessive fees, which can reduce your profits over time.
●    Fund performance: Evaluate the Fund's performance over different periods and compare it with relevant standards and peers to measure its stability and risk-adjusted results.
●    Fund manager experience: Consider the knowledge and track record of the fund manager(s) handling the gold mutual Fund. Fund knowledge and financial mindset can significantly affect the Fund's funds.
●    Portfolio composition: Analyze the Fund's makeup to understand its exposure to gold-related products, sectors, and regional regions. Diversification within the gold asset class can reduce risks.
●    Tax implications: Understand the tax implications of buying gold mutual funds, as the tax approach may vary based on factors such as the holding time and the type of Fund (eFundy or debt-oriented).
●    Entry and exit loads: While participating in gold mutual funds, be aware of any entry or exit loads that may be relevant, as these can impact your total profits, especially for short-term investments.
●    Lock-in periods: Some gold mutual funds may have lock-in periods, during which you cannot recover your investment. Ensure that the lock-in term, if any, fits with your financial plan and cash needs.

By carefully considering these factors, you can make an informed choice and choose the best gold mutual fund that fits your investment goals, risk tolerance, and general financial plan.

Conclusion

Investing in gold mutual funds can broaden your financial portfolio and gain exposure to the valuable metal market. The 10 best gold mutual funds featured in this article offer investors a range of choices, catering to different investment goals, risk profiles, and investment horizons. By conducting detailed research, reviewing fund success, and considering factors such as cost ratios, portfolio makeup, and fund manager experience, investors can make informed choices and benefit from the potential growth and security of gold investments.
However, it's important to remember that buying in gold mutual funds, like any other investment, carries risks, and past success does not promise future results. Seeking professional financial advice and performing regular portfolio reviews can ensure that your investments match your long-term financial goals and risk tolerance.