Best Gold Mutual Funds in 2025: In a country where gold is synonymous with tradition and financial security, gold mutual funds have emerged as a modern, hassle-free alternative to physical gold. These funds allow investors to benefit from gold’s price appreciation without the risks of storage, theft, or purity concerns. With inflation and market volatility on the rise, adding gold to your portfolio can act as a hedge while diversifying risk. This guide explores the best gold mutual funds in India, their safety, returns, and how to choose the right one for your financial goals.
Table of Contents
Why Invest in Gold Mutual Funds?
Gold mutual funds are ideal for:
- Portfolio Diversification: Gold often moves inversely to equities, balancing risk during market downturns.
- Liquidity: Easily buy/sell units on stock exchanges or via mutual fund platforms.
- Cost Efficiency: No making charges (unlike jewelry) or locker fees.
- Accessibility: Start with as little as ₹500 through SIPs.
Are Gold Mutual Funds Safe?
Gold mutual funds are relatively low-risk as they invest in gold ETFs (Exchange-Traded Funds) backed by physical gold. However, they are subject to price volatility linked to global gold prices, geopolitical tensions, and currency fluctuations. To minimize risk:
- Limit gold exposure to 10–15% of your portfolio.
- Combine with stable options like debt mutual funds or Sovereign Gold Bonds (SGBs).
Types of Gold Mutual Funds
- Gold ETFs: Track real-time gold prices (e.g., Nippon India Gold ETF).
- Gold Fund of Funds (FoFs): Invest in Gold ETFs without needing a demat account (e.g., SBI Gold Fund).
- Hybrid Funds: Mix gold with debt/equity (e.g., ICICI Prudential Gold-Debt Hybrid Fund).
Top 7 Best Gold Mutual Funds in 2025 to invest
Here’s a curated list of India’s top-performing gold mutual funds based on AUM, historical returns, and expense ratios:
1. Nippon India Gold Savings Fund (FoF)
- AUM: ₹2,300+ crore
- Expense Ratio: 0.15%
- 5-Year CAGR: 10.8%
- Why Invest? Low-cost leader with consistent returns.
2. SBI Gold Fund (FoF)
- AUM: ₹1,600 crore
- Expense Ratio: 0.50%
- 5-Year CAGR: 9.8%
- Why Invest? Trusted AMC with flexible SIP options.
3. HDFC Gold Fund (FoF)
- AUM: ₹1,100 crore
- Expense Ratio: 0.10%
- 5-Year CAGR: 10.3%
- Why Invest? Ultra-low fees and high liquidity.
4. ICICI Prudential Regular Gold Savings Fund (FoF)
- AUM: ₹850 crore
- Expense Ratio: 0.10%
- 5-Year CAGR: 9.6%
- Why Invest? Ideal for long-term SIP investors.
5. Axis Gold Fund (FoF)
- AUM: ₹650 crore
- Expense Ratio: 0.15%
- 5-Year CAGR: 9.5%
- Why Invest? Seamless digital investing experience.
6. Aditya Birla Sun Life Gold Fund (FoF)
- AUM: ₹600 crore
- Expense Ratio: 0.10%
- 5-Year CAGR: 9.4%
- Why Invest? Reliable for conservative investors.
7. Kotak Gold Fund (FoF)
- AUM: ₹550 crore
- Expense Ratio: 0.20%
- 5-Year CAGR: 9.2%
- Why Invest? Active management for better risk-adjusted returns.
Comparison Table: Best Gold Mutual Funds
| Fund Name | AUM (₹ Cr) | Expense Ratio | 5-Year CAGR |
|---|---|---|---|
| Nippon India Gold Savings | 2,300 | 0.15% | 10.8% |
| SBI Gold Fund | 1,600 | 0.50% | 9.8% |
| HDFC Gold Fund | 1,100 | 0.10% | 10.3% |
| ICICI Prudential Gold | 850 | 0.10% | 9.6% |
Read More: Best Mutual Funds in 2025: Top Safe & High-Return Picks for Smart Investors
How to Choose the Right Gold Mutual Fund
- Check Historical Performance: Look for 5+ years of stable returns.
- Compare Expense Ratios: Lower fees (<0.5%) mean higher net returns.
- AMC Reputation: Prioritize fund houses like Nippon, SBI, or HDFC.
- Investment Horizon: Hold for 5+ years to ride out volatility.
Gold Mutual Funds vs. Sovereign Gold Bonds (SGBs)
| Parameter | Gold Mutual Funds | Sovereign Gold Bonds (SGBs) |
|---|---|---|
| Liquidity | High (redeem anytime) | Lock-in period: 5–8 years |
| Returns | Linked to gold prices | Gold price + 2.5% annual interest |
| Tax Efficiency | LTCG taxed at 20% with indexation | Tax-free if held until maturity |
| Best For | Short-term hedging | Long-term wealth creation |
Tax Implications of Gold Mutual Funds
- Short-Term Gains (STCG): Held <3 years → Taxed as per income slab (up to 30%).
- Long-Term Gains (LTCG): Held >3 years → 20% tax with indexation benefits.
Example: - Investment: ₹1 lakh (2021) → Redemption: ₹1.6 lakh (2024).
- Indexed cost: ₹1.2 lakh (adjusted for inflation).
- Taxable gain: ₹40,000 → Tax: 20% of ₹40,000 = ₹8,000.
FAQs
1. Are gold mutual funds a good investment in 2024?
Yes! They hedge against inflation and diversify portfolios. Allocate 10–15% to gold.
2. Can I invest in gold and silver mutual funds together?
Silver mutual funds are rare in India. Opt for silver ETFs or hybrid funds instead.
3. Are there any risks in gold mutual funds?
Yes—gold prices can dip due to global factors like rising interest rates or a strong USD.
Conclusion
Gold mutual funds are a smart, modern way to own gold without physical storage hassles. The best gold mutual funds in India, like Nippon India Gold Savings Fundand HDFC Gold Fund, offer low costs, liquidity, and steady returns. Pair them with equities or debt funds for a resilient portfolio.
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