Gold ETFs in India to Invest

Indians love gifting and receiving gold during weddings, child birth, anniversaries, and special occasions. This glittering yellow metal has forever been a preferred buy and the safest and easiest way to invest, especially for traditional investors. While gold remains a lucrative investment product, the way it is used as an investment has evolved.

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Gold exchange-traded funds (ETFs) are a new and innovative avenue for investing in gold. A gold ETF is a type of mutual fund which holds gold assets, such as gold bullions or futures contracts, while it is traded on a stock exchange.

Simply put, gold ETFs represent physical gold in electronic and paper format. Instead of buying physical gold, investors buy shares in these funds. When these shares are traded, investors get the cash value of each share, offering the appeal of gold with the ease of stock trading.

Gold ETFs offer a lot of advantages. Unlike physical gold, you don’t need bank lockers for safekeeping. As these are digital investments, someone stealing them is not an option. Also, they are cheaper than gold jewellery, where you pay GST, making charges, etc. Another major advantage of buying gold ETFs in India is that you enjoy higher liquidity. Buying and selling physical gold can often be tedious and cumbersome. However, ETFs provide ease of investment, storage, and liquidity.

Listed below are some of the popular gold ETFs in India in 2025 on the basis of their CAGR.

Note: The Gold ETFs listed here, as of January 9, 2024, are selected based on their 5-year CAGR.

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Nippon India ETF Gold BeES
Launched in 2007, Nippon India ETF Gold BeES mirrors the price of physical gold. It offers investors a convenient, transparent way to invest in gold without owning it physically. This fund is one of the most popular gold ETFs in India, known for its reliability and efficient performance.

SBI Gold ETF
Introduced in 2009, the SBI Gold ETF offers an efficient method to invest in gold, tracking its price in India. It provides investors with exposure to the global gold market at low costs. The fund is known for simplicity, cost-effectiveness, and its potential to diversify investment portfolios through gold.

Kotak Gold ETF
Kotak Gold ETF, launched in 2007, aims to generate returns equivalent to domestic gold prices. It allows investors to access gold investment conveniently through an ETF format. The fund is structured to minimise physical risks while delivering performance closely aligned with gold's market value in India.

HDFC Gold Exchange Traded Fund
HDFC Gold ETF was established in 2010, offering a way to invest in gold without holding it physically. It seeks to track gold prices in India. This ETF combines convenience and safety, making it suitable for investors seeking portfolio diversification through a reliable gold-based instrument.

UTI Gold Exchange Traded Fund
Launched in 2007, the UTI Gold ETF replicates the price movement of physical gold in India. It enables investors to invest in gold easily and cost-effectively. The fund is designed to deliver returns that closely track gold’s domestic price, making it a transparent alternative to physical gold.

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• Gold Price Fluctuations
  Gold prices are influenced by inflation, interest rates, global economic stability, and geopolitical tensions. Understanding these factors is essential before investing, as they affect both short- and long-term performance.

• Tracking Accuracy
  Gold ETFs aim to mirror the price of physical gold. However, small deviations may arise due to fund expenses or market inefficiencies. ETFs with lower tracking errors typically provide more accurate gold price exposure.

• Fund Fees (Expense Ratio)
  The expense ratio represents the fund's annual management fee. A higher fee reduces your overall returns. Compare this across Gold ETFs to select a cost-effective option that doesn’t erode potential gains.

• Liquidity and Trade Volume
  Choose ETFs with higher trading volumes and strong liquidity. These attributes ensure easier entry and exit from positions, with minimal price impact and reduced bid-ask spreads.

• Fund Credibility and Past Performance
  Always assess the reputation of the fund house and review historical returns. Well-established fund managers with consistent past performance tend to maintain a closer alignment with gold prices and manage assets more effectively.

Let us look at some of the popular gold ETFs in India in 2025. These are based on the expense ratio.

Note: The Gold ETFs listed here, as of January 9, 2024, are chosen based on their expense ratios.

• Available at Low Cost
  Gold ETFs are affordable, as they can be purchased in small units. This allows investors to start investing in gold even with limited capital, making it an accessible option.

• Highly Liquid
  Gold ETFs can be easily traded on the stock exchange, just like shares. This ensures high liquidity, giving investors the flexibility to buy or sell units anytime during market hours.

• No Locker Required
  As Gold ETFs are held electronically in demat accounts, there’s no need for physical storage or lockers, reducing costs and risks related to security and maintenance.

• Less Volatile
  Compared to gold mutual funds, Gold ETFs provide portfolio stability and serve as a hedge against market volatility. They allow investors to gain exposure to gold without the ups and downs of broader financial markets.

For most Indians, buying gold is a luxury, a status symbol, and an assurance for the future. Investing in one of the popular gold ETFs in India in 2024 can boost your investment portfolio. However, before investing in gold ETFs, you need to consider several factors, such as the risk factor, fund management fee, taxation, and asset allocation. Keep in mind that you need to open a Demat account to invest in ETFs, and you must choose a trusted broker.