Best Gold ETF in India

Gold ETF in India has got traction in the recent past in the Indian stock market. These are the funds traded same like individual stocks. In this type of investment, the investor will not get any physical gold in the vault. As the same is credited in the form of units/shares in the demat account.

So if you invest in the gold ETF, you actually don’t own the gold. Even when you sell the gold ETFs, you will not get the same as delivered to your home. Instead, you will get the cash amount in your demat account.

What is the Gold ETF?

As mentioned above, gold ETFs are the funds that deal only with Gold metal as a commodity. Here the interest of the buyer is not to own the physical metal but to get the benefit of price hike and thus earning profits from the investment.

Many times, Gold ETFs are used to diversify the investment portfolio. It is known as a debt asset class wherein the risk is low and so as the returns. It is used to gain exposure to fluctuations of gold price itself.

Gold ETFs are used as a hedge to protect the investment. Gold ETF is the simpler move if one wants to diversify the investment portfolio.

Best Gold ETF in India

There are currently 12 Gold ETFs schemes available on the NSE. The list of them is as below.

Below is the data of gold ETF’s performance for the last 10 years. If you see the data below, you will find that there are 3 consecutive years where the returns of gold ETFs are negative. rest all the years the return is positive.

This current year (2019) so far the return on the ETFs are as high as 22% which is best so far.

Also Read: How to buy Gold via Google Pay?

List of best Gold ETFs in India

Now let’s check one by one the best gold ETF in India. We will go through the various factors while deciding the best gold ETF available in India for investment as portfolio diversification.

HDFC Gold Fund

HDFC is one of the best AMC when it comes to asset management. It has launched its gold fund in the year 2011 and below is the performance so far at various time intervals.

SBI Gold Fund

SBI Gold Fund was launched in the year 2011 with moderate-high risk. The fund has given 2.2% of return since its inception. Below are its performance and vital data points which will help you to choose the fund.

Aditya Birla Sun Life Gold Fund

The investment objective of the scheme is to provide returns that track returns provided by Aditya Birla Sun Life Gold ETF.

Reliance Gold Saving Fund

The investment objective of the Scheme is to seek to provide returns that closely correspond to returns provided by Reliance ETF Gold BeES.

Kotak Gold Fund

The investment objective of the scheme is to generate returns by investing in units of Kotak Gold Exchange Traded Fund.

How to Invest in Gold ETF in India?

Gold ETFs are a simple investment product and is used as portfolio diversification. One can trade in ETF funds in the cash market of NSE (National Stock Exchange) same like any other company’s stock.

For trading in ETF, one needs to have a demat account through which the transactions takes place. The units of the ETF funds are getting credited to your demat account when you buy the Gold ETF and debited from your demat account when you sell it in the market.

For opening a demat account, you need a PAN card, address proof, and ID proof. Once the account is opened, you can place the order for purchasing Gold ETF on the exchange. Once the order is executed, the confirmation will be sent to you. There is a small brokerage charge levied on the transaction by the broker.

Should you invest in Gold ETF in India?

Most people lose their money while making it more complicated. Invest in gold ETFs only if you are ok with the low returns.

Here before investing in gold ETF, you need to decide the objective of investment. It could be anything from gaining returns, portfolio diversification, as a piece of jewelry, looking for a fix returns and so on.

If your objective is for investment and the horizon is for more than five years, you probably can think of investing in gold ETFs. Else it doesn’t make sense to invest into gold ETFs as they are generating low returns investment avenue.

There are some special days when buying gold is considered as good luck, these days are Dhanteras, Akshay Tritiya. On such days the gold price is usually much higher than the rest of the days. So if you want to buy gold as an investment, you should not buy gold on these special days.

The unit of ETF actually represents some units of the gold, but the underlying unit is always diminishing with the time due to insurance, inventory cost, etc. Hence you will see the Gold ETFs are traded on the exchanges with the different prices by fund houses. You will never get the physical gold in ETF. It will always remain in the unit form in your demat account.

Gold ETF vs Physical Gold

Let’s quickly look at the comparison between Gold ETF and physical gold.

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