Invest in gold with ease by trading Gold ETFs or Gold Mutual funds:
Many investors have a great question. Can they hold the metal physically?
Both Gold ETFs and Gold Mutual Funds offer investment in Gold. Additionally, there are no GST, making charges, or taxes included. The transactions are safe, transparent.
Gold ETFs require a demat account for buying or selling. Trading hours are from 9:15 a.m. to 3:30 p.m. Their expense ratio is lower compared to Gold Mutual Funds.
Gold mutual funds do not require a demat account. Anyone can buy directly without going through distributors. However, the expense ratio is high.
Investing in gold funds can be a savvy move—especially when you’re aiming to hedge against inflation or diversify your portfolio, Prasanna. Here are some effective strategies to make the most of your gold fund investments:
🧠 1. Strategic Allocation
- Allocate 5–10% of your portfolio to gold funds for diversification.
- Use gold as a satellite asset alongside equity and hybrid funds to reduce overall volatility.
📅 2. Systematic Investment Plan (SIP)
- Start a monthly SIP in gold mutual funds to average out price fluctuations.
- This helps avoid timing the market and builds discipline over time.
📈 3. Tactical Entry During Uncertainty
- Increase exposure during geopolitical tensions, rising inflation, or equity market corrections.
- Gold tends to perform well when traditional assets falter.
💸 4. Choose Low-Cost Funds
- Opt for direct plans with lower expense ratios (e.g., SBI Gold Fund at 0.10%).
- Lower costs mean better long-term compounding.
🔄 5. Rebalance Periodically
- Review your gold allocation every 6–12 months.
- Trim profits if gold rallies sharply and reinvest in underperforming assets to maintain balance.
🧾 6. Tax-Efficient Holding
- Hold gold funds for 3+ years to benefit from long-term capital gains tax with indexation.
- Avoid frequent trading to minimize tax impact.
🧮 7. Pair with Complementary Assets
- Combine gold funds with conservative hybrid funds or Flexi-Cap funds for a balanced risk-return profile.
- This synergy can enhance portfolio resilience.
What are some top-performing gold funds currently?
🏆 Top Gold Funds (Direct Plans)
| Fund Name | 1Y Return | 3Y CAGR | 5Y CAGR | Expense Ratio | AUM (₹ Cr) |
|---|---|---|---|---|---|
| ICICI Pru Regular Gold Savings Fund | 32.0% | 23.8% | 13.6% | 0.10% | 2,274 |
| Nippon India Gold Savings Fund | 31.7% | 23.5% | 13.4% | 0.10% | 3,126 |
| SBI Gold Fund | 31.6% | 23.3% | 13.7% | 0.10% | 4,410 |
| Kotak Gold Fund | 31.3% | 23.5% | 13.6% | 0.20% | 3,155 |
| HDFC Gold ETF Fund of Fund | 32.0% | 23.5% | 13.7% | 0.20% | 4,272 |
| Aditya Birla Sun Life Gold Fund | 31.7% | 23.7% | 13.7% | 0.20% | 636 |
🔍 What Makes Them Stand Out
- Consistent 5-Year CAGR around 13.5–13.7% across top funds
- Low expense ratios, especially in direct plans, help maximize returns
- Strong 1-year performance driven by global uncertainty and gold price rally