India’s deep-rooted affinity for gold spans centuries, making it a trusted store of value for millions. Beyond tradition, gold remains a highly attractive investment asset.
During economic uncertainties, it provides stability and protection against inflation. Gold mutual funds provide an easy and cost-effective way for investors to tap into gold’s potential without the hassle of purchasing and storing physical gold.
Best Gold Mutual Funds 2025
|
Gold Fund |
NAV (₹) |
3yr Annualised Return |
|
LIC MF Gold ETF FOF Direct Growth |
28.67 |
22.10% |
|
Aditya Birla Sun Life Gold Fund |
27.96 |
21.41% |
|
Axis Gold Direct Plan – Growth |
30.62 |
21.92% |
|
SBI Gold Direct Plan – Growth |
29.55 |
22.02% |
|
Invesco India Gold ETF FoF Direct – Growth |
28.38 |
21.77% |
|
HDFC Gold ETF Fund of Fund Direct Plan – Growth |
30.22 |
22.00% |
|
Quantum Gold Savings Fund Direct – Growth |
36.93 |
22.00% |
|
Nippon India Gold Savings Fund Direct – Growth |
38.66 |
21.81% |
|
ICICI Prudential Regular Gold Savings (FOF) Direct – Growth |
30.91 |
22.01% |
|
Kotak Gold Fund Direct – Growth |
39.05 |
21.52% |
Benefits of Investing in Gold Mutual Funds
Check out the benefits of investing in gold mutual funds in India:
1. Convenient
Gold mutual fund investments offer the ease and convenience of trading online. There’s no hassle of physical storage, making gold investment safe and secure.
2. Portfolio Diversification
Investors can diversify their investment portfolios by investing in gold mutual funds. Gold investments help with market volatility and portfolio risks. It acts as a hedge against inflation and balances investment risk.
3. Liquidity
Gold mutual funds offer high liquidity, which means you can buy or sell your units on business days.
Unlike physical gold, you don’t need to find a buyer or worry about incurring resale losses. You can easily turn your investments into cash without any delay or hassle.
4. Affordability
Investing in gold mutual funds is affordable for investors who wish to start their investment journey with small amounts.
Investors can start investing in a gold mutual fund through a Systematic Investment Plan (SIP). Most SIP plans for gold mutual funds start at ₹100.
The barrier to entry is comparatively much lower than purchasing physical gold, and it also reduces the load of large lump sum investments.
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5. Tax Benefits
Gold mutual funds held for over 3 years are classified as long-term capital gains (LTCG), which are subject to indexation benefits. Hence, your gold mutual fund LTCG will reduce your tax burden.
On the other hand, if you hold your gold mutual fund for less than 3 years, it will be classified as short-term capital gains (STCG). STCGs in India are taxed according to an individual’s tax slab.
Learn how digital gold investments are taxed in India.
6. Low Storage Fee
Gold mutual funds and exchange-traded funds (ETFs) are held in secure vaults. Investors are not required to bear the storage cost, which is often associated with physical gold.
These physical storage costs can be substantial for individual investors who wish to start with small investment amounts. Hence, gold mutual funds are a cost-effective investment option.
Bottom Line
Gold mutual funds are a smart investment choice because they combine the timeless value of gold with the ease and flexibility of mutual funds.
They offer convenience, affordability, high liquidity, and portfolio diversification while eliminating the hassles and costs of physical gold storage.
With attractive tax benefits and professional management, gold mutual funds provide a balanced and efficient way to secure your wealth against inflation and market volatility.
