BEST GOLD ETF IN INDIA

Best Gold ETF in India

Best Gold ETF in India

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Best Gold ETF in India


Best Gold Exchange Traded Funds (ETFs) have become a popular investment option for Indian investors seeking exposure to gold without the hassle of storing physical gold. Gold ETFs are essentially open-ended mutual fund schemes that aim to track the domestic price of physical gold. Each unit of a gold ETF represents a certain amount of physical gold, typically 1 gram, and is backed by gold held by the fund in secure vaults. Investing in gold ETFs provides the dual benefit of gold’s stability as a safe-haven asset and the liquidity of stock market trading.



What Are Gold ETFs?


Gold ETFs are passive investment instruments that are listed and traded on stock exchanges just like shares. These funds invest in gold bullion and seek to replicate the performance of gold prices. Since they are backed by physical gold, the value of gold ETFs tends to move in line with gold prices in the domestic and international markets.


Gold ETFs are considered a convenient alternative to purchasing physical gold because they eliminate the issues of storage, security, and making charges associated with physical gold. Additionally, gold ETFs are highly liquid since they can be bought and sold on the stock exchange during trading hours at market prices.



Benefits of Investing in Gold ETFs



  1. Liquidity: Gold ETFs are listed on major stock exchanges like the NSE and BSE, providing high liquidity and ease of trading. Investors can buy and sell gold ETFs anytime during market hours at prevailing market prices.

  2. Purity of Gold: Gold ETFs are backed by 99.5% pure gold, ensuring the highest quality of the underlying asset.

  3. No Storage Hassle: Unlike physical gold, there is no need to worry about the storage and safety of gold when investing in gold ETFs.

  4. Transparency: Gold ETFs have a transparent pricing structure since they are linked to the real-time gold price in the market.

  5. Low Costs: The expense ratio for gold ETFs is relatively low compared to actively managed mutual funds, making them a cost-effective way to invest in gold.


Top Gold ETFs in India


Here is a list of some of the best-performing gold ETFs in India based on their performance, expense ratio, and liquidity:



1. Nippon India Gold ETF



  • Ticker: NIPGOLD

  • Expense Ratio: 0.39%

  • 1-Year Return: Approximately 13.5%

  • AUM: ₹2,500 crore+

  • Nippon India Gold ETF is one of the largest gold ETFs in India, with a strong track record of tracking gold prices accurately. The fund invests in gold of 99.5% purity and offers consistent returns.


2. SBI Gold ETF



  • Ticker: SBIGOLD

  • Expense Ratio: 0.51%

  • 1-Year Return: Approximately 12.8%

  • AUM: ₹1,800 crore+

  • SBI Gold ETF is known for its strong fund management and low tracking error. It is backed by physical gold held in secure vaults and provides excellent liquidity.


3. HDFC Gold ETF



  • Ticker: HDFCGOLD

  • Expense Ratio: 0.40%

  • 1-Year Return: Approximately 13.2%

  • AUM: ₹2,200 crore+

  • HDFC Gold ETF offers low cost and high liquidity, making it a preferred choice for investors seeking exposure to gold. Its performance closely follows gold prices.


4. ICICI Prudential Gold ETF



  • Ticker: IPGOLD

  • Expense Ratio: 0.45%

  • 1-Year Return: Approximately 13.7%

  • AUM: ₹2,000 crore+

  • ICICI Prudential Gold ETF is known for its efficient fund management and low tracking error, ensuring that the performance matches closely with gold price movements.


5. Kotak Gold ETF



  • Ticker: KOTAKGOLD

  • Expense Ratio: 0.55%

  • 1-Year Return: Approximately 12.9%

  • AUM: ₹1,500 crore+

  • Kotak Gold ETF is a reliable gold fund that offers consistent returns and liquidity, making it a strong contender for long-term gold investments.


Factors to Consider Before Investing in Gold ETFs



  1. Expense Ratio: Lower expense ratios ensure that more of the returns generated by the fund are passed on to investors.

  2. Tracking Error: A gold ETF with a low tracking error ensures that the fund’s performance is closely aligned with gold price movements.

  3. Liquidity: Higher liquidity ensures that investors can easily buy or sell gold ETF units on the stock exchange without significant price variation.

  4. Fund House Reputation: Established fund houses with strong fund management expertise are likely to offer more consistent performance and better customer service.


How to Invest in Gold ETFs


Investing in gold ETFs is straightforward and similar to buying stocks:




  • Open a Demat and Trading Account with a registered stockbroker.

  • Choose the preferred gold ETF based on expense ratio, tracking error, and fund performance.

  • Place a buy order through the trading platform during market hours.

  • Gold ETF units will be credited to your Demat account, and you can monitor performance through your trading platform.


Taxation on Gold ETFs



  • Gold ETFs are classified as non-equity funds for taxation purposes.

  • If held for less than 36 months, capital gains are treated as short-term capital gains and taxed as per the investor’s income tax slab.

  • If held for more than 36 months, capital gains are treated as long-term capital gains and taxed at 20% with indexation benefits.

  • Dividend income from gold ETFs (if any) is added to the investor's income and taxed according to the applicable income tax slab.


Conclusion


Investing in gold ETFs offers a simple and effective way to diversify your portfolio while benefiting from the stability of gold. Leading gold ETFs such as Nippon India Gold ETF, SBI Gold ETF, and HDFC Gold ETF provide strong returns and low expense ratios, making them ideal for long-term wealth preservation and growth. The ability to trade gold ETFs on stock exchanges adds liquidity and flexibility, making them a suitable investment option for both novice and experienced investors.

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