Gold Mutual Funds

The gold funds provide investment into a broader market. Here are some merits of investing in gold funds or gold ETFs:

• High Liquidity: It means you can easily buy and sell these funds in comparison to real gold. This flexibility to redeem investments works as an emergency fund in the hour of need. You can easily sell your units of gold funds directly through the AMC of your scheme.
• Safe Investment: These funds are protected by the SEBI (Securities and Exchange Board of India). It makes them the most trusted and safest investment option in mutual funds.
• Cost-efficient: Gold funds have cheaper transaction and maintenance costs. If you regularly do SIP in gold Mutual Funds, you invest Rs.500, which is more affordable than the actual gold. This makes them pocket-friendly and increases total returns on your gold investments.
• Convenient to Manage: Unlike physical gold, which needs storage space and security, gold funds are secured digitally through a Demat account. Their simple and affordable nature makes gold ETFs the best alternative to regular equity funds.

Most gold mutual funds in India invest in the same underlying asset, so the difference in returns between funds tends to be small. What sets them apart over time is the expense ratio and how closely they track gold prices.

Data last updated on 16-07-2026. Returns are annualised averages. AUM is an estimate and changes with market conditions. Past performance does not indicate future returns.

A quick overview of these funds:

• SBI Gold Fund: Launched on 30th September 2011, SBI Gold Fund is one of the oldest and largest schemes in this category, with an AUM of Rs.15,294.33 Crore. It has delivered a 3-year average return of 31.77% and a 5-year average return of 22.47%, making it the largest gold fund by assets among the three.
• ICICI Prudential Gold ETF FoF: Launched a day after SBI's fund, on 1st October 2011, this fund holds an AUM of Rs.6,853.57 Crore. It has posted a 3-year average return of 31.63% and a 5-year average return of 22.36%, closely tracking SBI Gold Fund's performance.
• Axis Gold Fund: Launched on 14th October 2011, Axis Gold Fund is the smallest of the three by AUM, at Rs.2,841.74 Crore. It has returned 31.22% on a 3-year average basis and 22.29% on a 5-year average basis, only marginally behind the other two.

Gold does not qualify as a risk-free asset. Despite being perceived as more secure than equity, it comes with unique risks that many people do not anticipate.

1. Volatility of The Gold Price: The NAV of the fund will fluctuate depending on the domestic price of gold. For instance, the price of gold was heavily down in 2013 and 2022 and can stay flat for several years. Short-term investors can face real losses.
2. Currency and Import Duty Risk:In May 2026, India raised gold and silver import tariffs from 6% to 15%, which affects domestic gold prices independently of global movements. Currency depreciation also amplifies price movements. A weakening rupee pushes domestic gold prices higher even if international prices are flat, and vice versa.
3. Tracking Difference:Since gold mutual funds invest through gold ETFs, returns may differ slightly from actual gold prices due to the expense ratio, cash held by the fund, and any lag in the ETF's tracking of physical gold.
4. Double Expense Layer:Gold mutual funds carry two levels of expense: The FoF's own expense ratio, plus the underlying ETF's expense ratio. This makes them marginally more expensive than investing directly in a gold ETF.
5. No Income Generation:Gold funds do not pay interest, dividends, or coupons. All returns are purely from price appreciation. If gold prices stay flat for 2-3 years, your returns during that period are negligible.
6. Not Suitable as The Only Investment: Gold has underperformed equity significantly over most 10+ year periods in India. It is a diversifier and a hedge, not a wealth creation tool on its own.

Gold mutual funds fall under the category of non-equity mutual funds when it comes to taxation. This is the basis on which they are taxed, and it differs from the way equity mutual funds or gold itself is taxed.

How are the gains taxed?

• Short-Term Capital Gains (STCG): In case the units of your gold fund are sold within 24 months of investing, the gain from these investments is clubbed with the overall income and taxed as per the slab rate.
• Long-Term Capital Gains (LTCG): In case the units are held for more than 24 months, it becomes a long-term capital gain and is taxable at a flat rate of 12.5% without any indexation facility available previously.

The following is a step-by-step guide to investing in the best gold mutual funds:

• Step 1: Open a free account at MySIPonline and complete your KYC (Know Your Customer) process.
• Step 2: Step up your SIP to auto-debit for regular deductions.
• Step 3: Pick a Gold fund that fits your goals or ask our financial expert for suggestions.
• Step 4: Add the chosen fund to your cart, select the SIP date and complete payment.
• Step 5: Track your fund’s performance and review transaction details via your personalized dashboard

Investing in mutual funds via  SIP is simple, with fast KYC and attentive, user-friendly solutions.