Best Gold ETFs in India 2024

Last Updated on Aug 20, 2024 by Anjali Chourasiya

Gold has always been a go-to investment for those seeking portfolio stability, especially during economic uncertainty. But with the hassles of storing and securing physical gold, more and more investors are turning to Gold ETFs as a smarter and more convenient way to invest in the precious metal. Gold ETFs combine the security of gold with the flexibility of trading on the stock market, offering a perfect balance of liquidity and growth potential. In this article, let’s understand gold ETFs in detail, learn how to find the best gold ETFs in India, find a list of the best gold ETFs in India, and more.

Gold ETF Meaning

Gold Exchange-Traded Funds (ETFs) are financial instruments that keep you ahead regarding the performance of gold and trade on stock exchanges like NSE, similar to shares. In other words, when you buy a gold ETF, you are buying not gold but also a representation of a certain amount of Gold. In this way, you can expose yourself to the price movements of gold without buying physical gold. Gold ETFs can be successful alternatives for investors looking for a hassle-free and cheap way to invest in the yellow metal. With the help of the best gold ETF in India, you can put a layer of stability in your portfolio, as gold is inevitably seen as a safe-haven asset during contentious times.

Features of Gold ETFs

The features of gold ETFs are mentioned below: 

1. Liquidity: Gold ETFs are traded on Exchanges similar to stock trading, i.e. directly invested or divested at the Stock Exchange. So you can easily trade at market prices during trading hours.
2. Transparency: The prices of Gold ETFs are driven by the gold price and you can track these in real time on NSE. This transparency helps you to compare Gold ETFs in India and decide on the one that fits your investment objectives.
3. Cost-Effectiveness: When you invest in Gold ETFs, your expenses are much lower compared to having gold physically in the form of coins or bars since there would be charges on them after buying and then a storage cost for keeping them safely. Investing in Gold through the best gold ETF with a low expense ratio in India, like Nippon Gold ETF, is considered a cost-effective way.
4. Diversification: Adding Gold ETFs can help you diversify your portfolio with an asset that tends to perform well during economic downturns. This may offer a way to shield your actual portfolio against stock market volatility.
5. No Storage Problems: The gold is stored in your Demat account, unlike physical gold, which requires secure storage. This takes away the hassle and risk of storing physical gold.

Best Gold ETFs in India – Updated 2024

Note: The best index mutual funds in the above table are derived from Tickertape’s Stock Screener. The data is as of 19th August 2024, and the filters applied are:

• Category: ETF > Gold 
• 5-yr CAGR: sort from high to low
• Expense ratio

Overview of the Best Gold ETFs in India

IDBI Gold Exchange Traded Fund (ETF)

The IDBI Gold Exchange Traded Fund (ETF) is a product offered by IDBI Mutual Fund that invests primarily in physical gold. As of the latest available data, the fund has a market capitalisation of Rs. 95.12 cr. and a closing price of Rs. 6,529.30 per unit. Over the past five years, the ETF has achieved a compound annual growth rate (CAGR) of 13.57%. The fund’s expense ratio is 0.10%.

Axis Gold ETF

The Axis Gold ETF, managed by Axis Mutual Fund, aims to track the performance of gold by investing in physical gold. The ETF has a market capitalisation of Rs. 319.17 cr. and a unit price of Rs. 60.80. Its 5-year CAGR is 13.24%, with an expense ratio of 0.53%.

Invesco India Gold Exchange Traded Fund

The Invesco India Gold Exchange Traded Fund, offered by Invesco Mutual Fund, focuses on generating returns through investments in physical gold. The fund’s market capitalisation is Rs. 74.22 cr., with a closing price of Rs. 6,335.00 per unit. It has recorded a 5-year CAGR of 13.22% and has an expense ratio of 0.55%.

Aditya BSL Gold ETF

The Aditya Birla Sun Life (BSL) Gold ETF, managed by Aditya Birla Sun Life Mutual Fund, invests in gold to mirror the metal’s price movements. The ETF currently has a market capitalisation of Rs. 353.23 cr., with a unit price of Rs. 63.89. It has a 5-year CAGR of 13.18% and an expense ratio of 0.54%.

ICICI Prudential Gold ETF

The ICICI Prudential Gold ETF, managed by ICICI Prudential Mutual Fund, is designed to provide investment returns that closely track the performance of gold prices. The fund has a market capitalisation of Rs. 1,905.05 cr. and a closing price of Rs. 62.34 per unit. Its 5-year CAGR is 13.12%, with an expense ratio of 0.50%.

SBI Gold ETF

The SBI Gold ETF, managed by SBI Mutual Fund, tracks the price of gold by investing in physical gold. The ETF has a market capitalisation of Rs. 2,644.09 cr., and the closing price per unit is Rs. 62.29. The fund’s 5-year CAGR is 13.11%, and its expense ratio is 0.65%.

HDFC Gold Exchange Traded Fund

The HDFC Gold Exchange Traded Fund, managed by HDFC Mutual Fund, aims to provide returns that reflect the performance of gold. The fund’s market capitalisation is Rs. 1,906.09 cr., with a unit price of Rs. 62.15. It has a 5-year CAGR of 12.89% and an expense ratio of 0.59%.

Nippon India ETF Gold BeES

The Nippon India ETF Gold BeES, managed by Nippon India Mutual Fund, focuses on tracking the performance of gold by investing in physical gold. The ETF has a market capitalisation of Rs. 5,168.88 cr., with a unit price of Rs. 60.34. It has recorded a 5-year CAGR of 12.86%, with an expense ratio of 0.79%.

UTI Gold Exchange Traded Fund

The UTI Gold Exchange Traded Fund, managed by UTI Mutual Fund, invests in gold to track its price movements. The ETF’s market capitalisation is Rs. 651.54 cr., and its closing price per unit is Rs. 60.85. The 5-year CAGR is 12.81%, with an expense ratio of 0.46%.

Quantum Gold Fund

The Quantum Gold Fund, managed by Quantum Mutual Fund, invests in physical gold to provide returns based on the metal’s price movements. The fund has a market capitalisation of Rs. 130.03 cr. and a unit price of Rs. 60.07. It has a 5-year CAGR of 12.80% and an expense ratio of 0.78%.

How Do Gold ETFs Work?

Gold ETFs operate by accumulating capital from many individual investors to pay for either shares of gold or stocks based on gold. On the other hand, Gold ETFs mean receipt for units of physical gold, and you can ensure that these presenting holders have ownership rights over the real available asset. That is usually in grams or a multiplying factor from 1 to 10 times one gram. Nippon India Gold BeES, which is one of the best gold ETFs offered in India, does exactly this by maintaining physical gold as an underlying asset to track price movements related to it.

Gold ETF essentially is a mutual fund that invests in gold and physical stock stored safely by banks back the units of these schemes. Your investment will increase or decrease in accordance with the spot market price of gold. Gold ETFs are traded on the NSE, and you can buy and sell your units through brokers like any other company stock at the prevailing market price. Gold ETFs’ returns in India perform a function of pointing to the gold prices and generally return similar or close equivalent interest to holding real metal. A key element to keep in mind as you search for the Best Gold ETF would be its expense ratio, which is what it costs to manage the ETF. So, in a similar way, the expense ratio of Gold BeES is low, thus making it pocket-friendly for investors.

Gold ETFs, on the other hand, also allow you to engage in the gold market with a small investment if you have no idea where and how much actually even that is questionable. The flexibility provided by trading and investing in the NSE makes Gold ETFs one of the most convenient ways to own gold in India.

How to Find the Best Gold ETF?

Finding the best Gold ETF requires evaluating several factors that can impact the overall performance and suitability of the fund for your investment goals.

1. Historical Performance: Although past performance is not a guarantee of future results, reviewing the historical data of a Gold ETF can give you insights into its potential and consistency. You might consider observing how the fund has performed during various market conditions to assess its resilience.
2. Liquidity: The liquidity of a Gold ETF is crucial as it determines how quickly and easily you can buy or sell its units. Highly liquid ETFs are preferable, as they allow you to meet your financial needs promptly, even in emergencies, without facing significant price differences.
3. Tracking Error: The best Gold ETFs are those that closely track the price of gold with minimal tracking error. This means the difference between the returns of the Gold ETF and its underlying index should be negligible, ensuring that you are getting returns that are as close as possible to the actual price movements of gold.
4. Expense Ratio: A lower expense ratio means lower costs for managing the ETF, which can enhance your overall returns. When comparing Gold ETFs, consider selecting those with a low expense ratio to maximise your investment efficiency.

While each of these factors is important, it’s essential not to evaluate them in isolation. A holistic approach that considers all these aspects together may provide a more accurate picture of the Gold ETF’s potential and suitability for your portfolio.

How To Find the Best Gold ETF Using Tickertape?

Use Tickertape’s Stock Screener To Discover the Best Gold ETFs

Discover the best Gold ETFs with Tickertape’s Stock Screener based on metrics that matter to you. Add filters like expense ratio and sort it from low to high if you are looking for a low-cost Gold ETF. Adding a tracking error filter will help you identify ETFs that are deviating from the benchmark and those that are performing in line with it. Likewise, there are other filters related to risk, returns, and so on that you can add to the screener to get Gold ETFs in 2023.

Evaluate Gold ETFs with Tickertape’s ETF Pages

Once you have a list of the top Gold ETFs, you can evaluate these individually using Tickertape’s ETF Pages. Let us launch the Kotak Nifty 50 ETF as an example. Follow these steps:

• Go to Tickertape website or app
• Look for your desired ETF in the search box
• When on the ETF page, you can see an investment checklist on the left-hand side. This gives you a bird’s eye view of the ETF

Next, in the overview tab of Kotak Nifty 50 ETF, you can see the real-time NAV for various periods like 1 Day, 1 Week, 1 Month, and 1 Year, the asset class of underlying securities, and the type of indices the ETF is tracking. The overview tab also mentions the key metrics in addition to the expense ratio and tracking error, AUM of the ETF, and profile of the Asset Management Company.

But what really sets Tickertape’s ETF Pages apart from others is its “Peers” tab where you can compare the ETF with its peers based on expense ratio, tracking error, and liquidity. You can also compare the price trend of two or more ETFs or with a sing stock for your desired period.

The ‘News’ and ‘Events’ tabs on the ETF Page has recent developments and corporate actions relating to the fund and its constituents.

How Are Gold ETFs Taxed?

Understanding the tax implications of investing in Gold ETFs is crucial for effective financial planning. Gold ETFs, treated as non-equity mutual funds in India, are subject to specific tax rules that vary depending on the holding period. Here’s a breakdown of how Gold ETFs are taxed under the latest regulations:

Short-Term Capital Gains (STCG)

If you sell your Gold ETF units within three years of purchasing them, the gains are considered Short-Term Capital Gains (STCG). These gains are added to your total income and taxed according to your income tax slab rate. For instance, if you fall into the highest tax bracket, the STCG on your Gold ETF could be taxed at 30% plus applicable cess and surcharge.

Long-Term Capital Gains (LTCG)

If you hold your Gold ETF units for over three years, the gains are classified as Long-Term Capital Gains (LTCG). LTCG on Gold ETFs is taxed at a flat rate of 20%, with the benefit of indexation. Indexation allows you to adjust the purchase price of your Gold ETF for inflation, which can significantly reduce your taxable gains and, consequently, the tax payable.

Dividend Income

Although Gold ETFs typically do not distribute dividends, if any dividends are received, they are added to your total income and taxed according to your income tax slab. It’s important to note that the Dividend Distribution Tax (DDT) has been abolished, and the investor now bears the dividend tax.

Goods and Services Tax (GST) on Brokerage

While GST does not directly apply to Gold ETFs, it applies to the brokerage or transaction fee when you buy or sell them. The GST rate is currently 18% on the brokerage amount, which indirectly increases the cost of trading Gold ETFs.

The tax treatment of Gold ETFs can influence your investment strategy. When selecting the best gold ETF for your portfolio, consider these tax implications and other factors such as the expense ratio, liquidity, and tracking error.

Benefits of Investing in Gold ETFs

1. Since Gold ETFs are stored in a digital form in your Demat account, you need not worry about theft or paying storage costs.
2. You can access these as you require without having to depend on your locker provider.
3. Gold ETFs are liquid, just like stocks. You can buy and sell them as and when you need them.
4. Since ETFs are available in the form of units, you can buy your desired quantity at low costs. 
5. Gold ETFs act as a hedge against market volatility, giving your portfolio some stability.
6. Gold ETF in India doesn’t have entry and exit loads.
7. Investors can avail a loan by pledging their ETFs as security with financial institutions.
8. You can pledge Gold ETF units with banks as collateral to avail a loan.

Risks of Investing in Gold ETFs

1. Gold prices can fluctuate significantly, impacting your investment’s value.
2. The ETF’s returns may not perfectly match the actual gold price.
3. Low trading volumes can make it difficult to buy or sell large quantities.
4. Management fees can reduce your overall returns.
5. You don’t own physical gold, just digital units.
6. Exchange rate fluctuations can affect the value of international gold ETFs.

Gold ETF vs Physical Gold

Below are the major differences between gold ETFs and physical gold.

Who Should Invest in Gold ETFs?

• Busy Professionals: Individuals with little time to manage physical assets who prefer a simple, digital investment.
• First-Time Investors: Those new to investing in gold who seek an easy and accessible way to diversify their portfolios.
• Long-Term Investors: People with a medium to long-term investment horizon looking for a stable asset to hedge against market volatility.
• Retirement Planners: Investors focused on building a retirement portfolio with a safe-haven asset like gold.
• Portfolio Diversifiers: Those looking to balance their portfolio by adding a non-correlated asset class such as gold, especially during times of economic uncertainty.

Things to Consider as an Investor

• Expense Ratio: The expense ratio directly affects your returns, so opting for a Gold ETF with a lower expense ratio can help maximise your gains over time. Even a small difference in expense ratios can have a significant impact, especially over the long term.
• Liquidity: High liquidity ensures that you can easily buy or sell your Gold ETF units without affecting the market price. It’s important to choose a Gold ETF that is actively traded on the exchange to avoid issues with liquidity.
• Tracking Error: A low tracking error indicates that the ETF closely follows the price movements of gold, ensuring that your returns mirror the actual gold price. Be cautious of ETFs with high tracking errors, as they may lead to lower-than-expected returns.
• Investment Horizon: Gold ETFs are typically more suited for medium to long-term investment horizons, allowing you to benefit from potential appreciation in gold prices over time. If you have a short-term focus, consider the market conditions carefully before investing.
• Tax Implications: Be aware of the tax treatment of Gold ETFs, as short-term gains are taxed according to your income slab, while long-term gains are taxed at 20% with indexation benefits. Understanding these implications can help you plan your investment strategy more effectively.
• No Physical Storage: Since Gold ETFs are held digitally, you avoid the risks and costs associated with storing physical gold. This makes Gold ETFs a convenient option for those who prefer not to deal with the hassles of securing and insuring physical assets.

To Conclude

Gold ETFs offer a convenient and efficient way to invest in gold, providing all the benefits of the precious metal without the need for physical storage. By carefully selecting the best Gold ETFs in India, you can gain exposure to gold’s potential for growth and stability while enjoying the ease of trading on the stock exchange. Whether you’re looking to hedge against market volatility or diversify your portfolio, the right Gold ETF can be a valuable addition to your investment strategy.

Frequently Asked Questions (FAQs)

• Author
• Recent Posts

Aradhana Gotur

Senior Content Writer at Tickertape

Aradhana Gotur is a Content Writer with 4 years of experience in personal finance, stock markets, and lifestyle areas. Having recognised the power of words, she constantly works on using them to enhance financial awareness among the masses and meet business objectives. One of her greatest strengths is breaking complex concepts in an easy-to-understand way.

Latest posts by Aradhana Gotur (see all)

• Best Gold ETFs in India 2024 - Aug 20, 2024
• Things To Consider When Choosing a Debt Mutual Fund - Jul 30, 2024
• Best Index Funds in India To Invest in 2024 - Jul 30, 2024