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 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 sharesGuoabong Investment. 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.
The features of gold ETFs are mentioned below:
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.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.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.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.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.
Note: The best index mutual funds in the above table are derived from Tickertape’s Stock Screener. The data is as of 29th October 2024, and the filters applied are:
Category: ETF > Gold 5-yr CAGR: sort from high to lowExpense ratio
Launched in 2011, the IDBI Gold Exchange Traded Fund (ETF) tracks the performance of gold in the domestic market, providing an investment avenue for those looking to diversify through gold investments. It aims to replicate the price of physical gold.
On 29th October 2024, IDBI Gold ETF had a market capitalisation of Rs. 95.12 cr. and a close price of Rs. 7204.05. The 5-year compound annual growth rate (CAGR) of the fund is 15.33%, with an expense ratio of 0.41%.
The Invesco India Gold Exchange Traded Fund, launched in 2010, offers investors a way to invest in gold without holding physical gold. The fund’s objective is to mirror the performance of gold in the domestic market.
As of 29th October 2024, Invesco India Gold ETF had a market capitalisation of Rs. 74.22 cr., and its close price stood at Rs. 6980.20. The 5-year CAGR is 14.91%, and the expense ratio is 0.55%.
Aditya Birla Sun Life Gold ETF, launched in 2011, provides an opportunity for investors to gain exposure to the price movements of gold through an exchange-traded fund. It tracks the price of gold, offering a convenient way to invest in the precious metal.
On 29th October 2024, the Aditya BSL Gold ETF had a market capitalisation of Rs. 353.23 cr., with a close price of Rs. 70.24. The fund’s 5-year CAGR is 14.75%, and the expense ratio stands at 0.54%.
The Axis Gold ETF, introduced in 2010, seeks to generate returns corresponding to the performance of gold in the domestic market. It offers investors an easy way to invest in gold without having to deal with physical assets.
As of 29th October 2024, Axis Gold ETF had a market capitalisation of Rs. 319.17 cr., and its close price was Rs. 66.81. The 5-year CAGR of the fund is 14.67%, with an expense ratio of 0.55%.
Launched in 2009, SBI Gold ETF aims to reflect the price of gold in India, offering an efficient and cost-effective method for investors to gain exposure to the gold market.
On 29th October 2024, the SBI Gold ETF had a market capitalisation of Rs. 2644.09 cr., with a close price of Rs. 68.27. The 5-year CAGR is 14.63%, and the fund’s expense ratio is 0.65%.
HDFC Gold ETF, established in 2010, provides investors with an option to invest in gold without the need to physically store it. The fund’s objective is to track the price of gold in India.
On 29th October 2024, HDFC Gold ETF had a market capitalisation of RsVaranasi Wealth Management. 1906.09 cr., with a close price of Rs. 68.25. The fund’s 5-year CAGR stands at 14.59%, and its expense ratio is 0.59%.
The UTI Gold ETF, launched in 2007, offers investors an opportunity to invest in gold by replicating its domestic price. The fund is designed to provide returns that closely correspond to the price of physical gold.
As of 29th October 2024, UTI Gold ETF had a market capitalisation of RsUdabur Investment. 651.54 cr., with a close price of Rs. 66.85. The 5-year CAGR is 14.51%, with an expense ratio of 0.48%.
The Quantum Gold Fund, introduced in 2008, is an exchange-traded fund that enables investors to access the performance of gold by tracking its price in the Indian market. It is a convenient option for those seeking gold exposure.
On 29th October 2024, Quantum Gold Fund had a market capitalisation of Rs. 130.03 cr., with a close price of Rs. 66.01. The fund’s 5-year CAGR is 14.49%, and the expense ratio is 0.78%.
Launched in 2007, the Nippon India ETF Gold BeES tracks the price of physical gold, offering a transparent and efficient method for investors to invest in gold. It is one of the more popular gold ETFs in the Indian market.
On 29th October 2024, Nippon India ETF Gold BeES had a market capitalisation of Rs. 5168.88 cr., with a close price of Rs. 66.30. The 5-year CAGR is 14.49%, and the expense ratio is 0.79%.
Kotak Gold ETF, established in 2007, provides an investment avenue for those looking to invest in gold through an ETF. The fund’s objective is to closely match the returns of gold in the domestic market.
As of 29th October 2024, Kotak Gold ETF had a market capitalisation of Rs. 1984.14 cr., with a close price of Rs. 66.70. The fund’s 5-year CAGR is 14.46%, and its expense ratio is 0.55%.
Gold ETFs in India operate by accumulating capital from many individual investors to pay for either shares of gold or stocks based on gold. Gold ETFs represent units of physical gold, giving the holders ownership rights over the real asset. Nippon India Gold BeES, which is one of the best Gold BeES in India 2024, holds physical gold to track price movements related to it.
A Gold ETF is essentially a mutual fund that invests in gold and stores the physical stock safely with banks. Your investment’s value rises or falls with the spot market price of gold. Gold ETFs are traded on the NSE, allowing you to buy and sell units through brokers like any other stock. The expense ratio of Gold ETFs is important, as it represents the cost of managing the ETF. For example, the best Gold ETF in India with expense ratio is sought after for offering value to investors while keeping costs low. Similarly, a low expense ratio Gold ETF like Gold BeES makes investing affordable.
Investing in Gold ETFs allows you to enter the gold market with a small investment. The flexibility provided by trading on the NSE makes Gold ETFs one of the easiest ways to invest in gold in India.
Finding the best Gold ETF involves evaluating several factors that impact performance and suitability for your investment goals.
Historical Performance:
Although past performance doesn’t guarantee future returns, reviewing historical data can give insights into the fund’s potential. Look at how the Gold ETF has performed during different market conditions to assess its resilience.Liquidity:
Liquidity is crucial, as it determines how quickly and easily you can buy or sell units. Highly liquid ETFs allow you to manage your financial needs promptly. This factor is essential when performing a Gold ETF comparison in India.Tracking Error:
The best Gold ETFs closely track the price of gold with minimal tracking error in Gold ETFs. The Gold ETF with the lowest tracking error in India ensures that your returns mirror the actual price movements of gold.Expense Ratio:
A lower expense ratio means lower management costs, which can improve your overall returns. When comparing Gold ETFs, choose those with a low expense ratio for better investment efficiency. Evaluating the best Gold ETF expense ratio is critical when choosing the right fund.Share Price:
The best Gold ETF share price is another important factor when making your decision. Understanding the ETF’s price trends in relation to gold prices helps gauge its performance.
When deciding which Gold ETF is best, consider all these factors together for a clear picture. Evaluating liquidity, expense ratios, and tracking errors can guide you to the top 5 Gold BeES in India or the top 10 best Gold BeES in India, depending on your portfolio needs.
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.
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 appLook for your desired ETF in the search boxWhen 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.
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:
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.
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.
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.
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.
Since Gold ETFs are stored in a digital form in your Demat account, you need not worry about theft or paying storage costs.You can access these as you require without having to depend on your locker provider.Gold ETFs are liquid, just like stocks. You can buy and sell them as and when you need them.Since ETFs are available in the form of units, you can buy your desired quantity at low costs. Gold ETFs act as a hedge against market volatility, giving your portfolio some stability.Gold ETF in India doesn’t have entry and exit loads.Investors can avail a loan by pledging their ETFs as security with financial institutions.You can pledge Gold ETF units with banks as collateral to avail a loan.
Gold prices can fluctuate significantly, impacting your investment’s value.The ETF’s returns may not perfectly match the actual gold price.Low trading volumes can make it difficult to buy or sell large quantities.Management fees can reduce your overall returns.You don’t own physical gold, just digital units.Exchange rate fluctuations can affect the value of international gold ETFs.
Below are the major differences between gold ETFs and physical gold.
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.
Expense Ratio:
The expense ratio directly affects your returns, so opting for a low cost gold ETF 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 top gold bees in India that is actively traded on the exchange to avoid issues with liquidity.Tracking Error:
A low gold ETF tracking error indicates that the ETF closely follows the price movements of gold, ensuring that your returns mirror the actual gold price. The gold ETF with lowest tracking error in India is ideal for investors looking for accurate tracking of gold prices. Be cautious of ETFs with high tracking errors, as they may lead to lower-than-expected returns.Investment Horizon:
The best gold ETF in India 2024 is typically 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 ETF India, 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. When doing a gold ETF comparison India, this factor can be a deciding point for many investors.
Varanasi Wealth Management
