Modern markets have made Gold Mutual Funds a sophisticated choice for investors who want to trade in for physical gold investments. These options make it possible for investors to enjoy changes in the price of gold without any hassle, making them the need of storing physical gold and their protection thus they are becoming the favorite for the present investors. To a large extent, Gold Mutual Funds keep their investments on Gold Exchange Traded Funds (ETFS) and follow the fluctuations in the gold prices. These funds target a large array of investors with diverse financial backgrounds with just an initial investment amount of ₹500.
Why Invest in Gold Mutual Funds?
- Gold Mutual Funds contribute importantly toward improving portfolio diversification.
- Since gold has a negative correlation to the performance of equity, these funds are an excellent choice to investment portfolios affected by the vagaries of the market.
- This feature is in support of their role as indispensable tools for risk management and the achievement of long term financial stability.
- Gold Mutual Funds offer better liquidity and transparency options for investors than having physical gold.
- Besides, due to NAVS daily updates, investors can constantly review their investments and easily convert their investments to cash if necessary.
- The electronic transactions one gets to enjoy are quick and easy in their operation thus eliminating all the trouble that comes with moving or keeping physical gold.
Top 5 Gold Mutual Funds in India
1. HDFC Gold Fund: HDFC Gold Fund sets itself apart from similar funds thanks to how steady its performance has been and its low expense ratio. It mirrors the returns of Gold ETFs letting investors access gold investments without spending too much.
- Started: October 2011
- Managed by: Mr. Krishan Kumar Daga
- Expense Ratio: 0.50%
- Minimum Investment: Rs 100 for SIP
2. SBI Gold Fund: SBI Gold Fund offers a steady path to invest in gold-backed returns. With an experienced management overseeing it, the fund combines a clear investment approach and a track record of reliable results making it a good choice for managed gold exposure.
- Start Date: September 2011
- Managed By: Mr. Ashwini Kumar Arora
- Cost Ratio: 0.60%
- Minimum Requirement: ₹5,000 in a single investment or ₹500 through SIP.
3. ICICI Prudential Regular Gold Savings Fund: ICICI Prudential’s Gold Savings Fund stands out because of its organized portfolio and planned approach to investing. The fund aims to deliver results that align with its Gold ETF giving people a trusted way to invest in gold.
- Start Date: May 2011
- Managed By: Mr. Manish Banthia
- Cost Ratio: 0.55%
- Lowest Investment: ₹1,000
Also read: Top 5 ICICI Credit Cards in 2025 Offering Insane Rewards!
4. Axis Gold Fund: Axis Gold Fund stood out because of its approach to costs and management. It provides a way to invest in gold without owning it while ensuring expert handling.
- Started: October 2011
- Managed by: Mr. Devang Shah
- Expense Ratio: 0.47%
- Starting Investment: ₹5,000
5. Aditya Birla Sun Life Gold Fund: Aditya Birla Sun Life Gold Fund has built its name as a strong-performing fund due to its solid history and focus on Gold ETF as a long-term investment choice. It serves as a dependable option under a trusted investment group supported by a renowned asset management firm.
- Started: March 2012
- Managed by: Satyabrata Mohanty
- Cost Ratio: 0.45%
- Minimum Amount: ₹ 1000
Tax Implications of Gold Mutual Funds
For tax purposes in India, Gold Mutual Funds are treated as non-equity mutual funds. Short-term capital gains (holding period less than three years) are taxed in accordance with the income tax slab of the investor. Long-term capital gains (holding period above three years) are taxed at 20% with indexation benefits, meaning the adjusted purchase price for inflation, potentially reducing the taxable amount of the long-term capital gains. With the removal of Dividend Distribution Tax in the Union Budget 2020, investors must now pay tax on dividends based on their income tax slab rate.
Key Features:
- Professional portfolio management
- Systematic investment options
- High liquidity and transparency
- No storage and security issues
- Cost-effective exposure to gold
Conclusion
Gold Mutual Funds are a good way to spread risk and handle market ups and downs. They not only allow diversification but also offer the benefits of gold’s performance, easy access to funds, and returns linked to the gold market. Look at important factors before putting your money in Gold Mutual Funds. Check past returns and the fund’s expense ratio. Think about possible tax impacts and decide if it matches what you want from your investments.
Written by Promita Ghosal
