Best Gold ETF in India to Invest in 2024 (Detailed Info)

Are you looking for the best gold ETF in India? Gold has been one of the most trusted investments in India for centuries and it still plays an important role in the Indian culture. If we look at the long-term performance of gold, it has delivered an average annual return of 7.98% between January 1971 and March 2024 according to Statista. Investors today still turn to gold for diversification and also during economic downturns due to its stability. There are several alternatives to investing in physical gold, these include digital gold, SGB (Sovereign Gold Bonds), Gold Mutual Funds and Gold ETFs.

In this article, we will take a look at what Gold ETFs are, find the best Gold ETF in India and also the means through which we can invest in them. Keep reading to find out.

What is a Gold ETF?

A Gold ETF (Exchange Traded Fund) just like other ETFs is traded on the stock exchange just like stocks. Here a single unit of the Gold ETF is equal to one gram of gold. Investments made in Gold ETFs are backed by physical gold of very high purity and the Gold ETF units track the price of gold.

Gold ETFs function similarly to mutual funds. Multiple investors invest in these Gold ETFs and this investment is pooled together to invest in physical gold which is then held by a custodian. As each unit of the Gold ETF represents one gram of physical gold, its price as well is directly linked to gold. When the price of gold increases, your investment value also increases, and vice versa.

Investing in gold ETFs allows you to capitalize on the price fluctuations in gold without worrying about its storage and security. In India, the Securities and Exchange Board of India (SEBI) regulates these funds, and are offered by various mutual fund companies.

Best Gold ETF in India 2024

Following are the best Gold ETFs in India after carefully taking into account the AUM, ETF performance, and expense ratios as of 14th May 2024. We have not considered the performance of any Gold ETF Fund of Funds while compiling this list.

ETF Name
1Y returns 
3 Y returns
5 Y returns
Expense Ratio
AUM in Crores
16.84%
13.67%
16.61%
0.59
4,845
17.44%
13.77%
16.66%
0.50
4,666
17.24%
13.64%
16.75%
0.65
4,583
17.4%
13.72%
16.78%
0.55
4,059
17.94%
13.71%
16.58%
0.46
994
17.42%
13.73%
16.81%
0.56
894
17.47%
13.72%
16.84%
0.54
790

How to Invest in Gold ETF in India?

Indian investors have several options when it comes to investing in Gold ETFs. This investment option is also made available to investors on the Rupeezy app. The following steps will guide you to invest in Gold ETFs on the Rupeezy app if you already have created a Demat account with Rupeezy.

  • Step 1: Open the Rupeezy app and head to the Watchlist section.
  • Step 2: Search for the desired Gold ETF or simply search for ‘Gold ETF’ and you will be provided with the available options.
  • Step 3: Analyse the Gold ETF based on the various metrics provided. Some of the metrics that you can consider are AMC performance, AUM of the ETF, expense ratio, NAV and past returns.
  • Step 4: Place the buy order by clicking on the ‘Buy’ option highlighted in green.
search for gold etf
Screenshot of searching Gold ETF in Rupeezy web

 

The process followed to invest in a Gold ETF is similar to that of investing in stocks. Once you have placed the order and completed the transaction, you will receive an SMS notification confirming the same.
The steps mentioned above require you to have a DEMAT account opened with Rupeezy. If you have to still have not opened a Demat account with Rupeezy click here to find out how.

What are the Benefits of Investing in Gold ETFs?

Investing in Gold ETFs comes with the following benefits:

  • Cost-effective: Investing in gold ETFs removes the expenses associated with its security or storing physical gold. Also, they have a low expense ratio, which makes it cost-effective. 
  • Liquidity: Gold ETFs are traded on stock exchanges like NSE and BSE, which means you can buy and sell anytime during the market hour. Hence, you get the opportunity to capitalize on the gold price movement more frequently. 
  • Flexibility: Gold ETFs can be purchased online at your convenience. Furthermore, ETFs allow you to buy and sell units just like stocks which makes the purchase and selling process flexible to your needs. 
  • Transparent: You can track your investment in gold ETFs in real-time, which makes it transparent. 
  • Storage: Physical gold often becomes a liability when held in large quantities due to storage issues. Gold ETFs address this as all your investments are held in the Demat account. 

Things to Consider Before Investing in Gold ETFs

Although investing in Gold ETFs is really convenient and comes with several other benefits, here are some other factors that you should consider before investing in Gold ETFs.

  • Gold offers comparatively lower returns in comparison to equity, which averages around 10-12% annually.
  • Tracking market conditions, macroeconomic factors and other major global affairs is important as these factors can lead to changes in the value of gold. 
  • If you want to trade in gold actively then Gold ETFs are a great option as they offer better financial viability compared to other gold-based investments.
  • It is advisable to invest 5–10% of your investment in Gold ETFs. This helps your portfolio to remain stable and offer consistent returns which enjoying the benefits of diversification.
  • Monitor gold price trends before initiating transactions. Consider purchasing Gold ETFs at lower prices and holding them for the long term as the prices increase. 

In Closing

Gold has been a great investment for the long term and serves as a great hedge in times of economic uncertainties. Gold has performed exceptionally well in the first half of 2024 delivering returns as high as 15% by May. This has led to several investors considering gold as an attractive investment. Gold ETFs serve as a great alternative to physical gold which come with several complexities associated to their ownership. Happy Investing!