Introduction:
Gold has been a reliable investment option for centuries in India. Investors frequently turn to this precious metal, especially during volatile market periods, owing to its stability and the potential for capital appreciation. However, investing in physical gold is gradually becoming obsolete. Not only does it entail security concerns, but also involves hefty making charges, compromising your returns.
Gold-based Exchange-traded Funds (ETFs) have thus emerged as a popular investment choice. They allow you to invest in gold without physically owning the metal. Continue reading to explore gold ETFs and the top gold ETF options to invest in India in 2024.
What are gold ETFs?
Gold ETFs are financial instruments that provide investors with a cost-effective and hassle-free means to invest in gold. Unlike physical gold, gold ETFs are sold and purchased on the stock exchanges, making them more liquid and flexible investment avenues. Other advantages of investing in gold ETFs include portfolio diversification, transparency, and easy accessibility.
Each unit of a Gold ETF corresponds to a specific quantity of gold, enabling investors to experience fluctuations in the price of precious metals without grappling with storage and security issues. These funds mirror the performance of gold bullion, presenting a diversified and easily tradable investment option for individuals looking to incorporate gold into their portfolios.
Top gold ETFs to invest in India in 2024
Here are the top-performing gold ETFs for Indian investors in 2024:
1. SBI Gold ETF
Managed by SBI Mutual Fund, the SBI Gold ETF has consistently been a reliable choice for investors. It mirrors the domestic price of physical gold and provides a cost-effective and transparent way to invest in the precious metal. The fund also allocates a small portion of investments to short-term debt securities. The fund's track record of stability and its association with one of India's leading banks make it a compelling option.
As of 28 February 2024, SBI Gold ETF had a Net Asset Value (NAV) of Rs. 54.34 per unit. The one-year return of this fund stood at 9.65%.
2. HDFC Gold ETF
HDFC Gold ETF is another heavyweight in the Indian gold ETF market. Managed by HDFC Mutual Fund, this ETF offers you the chance to invest in gold without the hassle of physical ownership. Its low expense ratio and efficient tracking of domestic gold prices make it an attractive choice for both seasoned investors and those new to the world of ETFs.
As of 28 February 2024, HDFC Gold ETF had a NAV of Rs. 54.37 per unit. The one-year return of this fund stood at 4.38%.
3. ICICI Prudential Gold ETF
ICICI Prudential Gold ETF, managed by ICICI Prudential Mutual Fund, has been a consistent performer in the gold ETF category. It aims to provide returns that closely correspond to the returns generated by physical gold. With its liquidity and competitive expense ratio, this ETF is a good option for investors seeking stability and affordability.
As of 28 February 2024, the NAV of ICICI Prudential Gold ETF stood at Rs. 54.52 per unit, while the one-year return stood at 10.18%.
4. Kotak Gold ETF
Kotak Gold ETF is managed by Kotak Mutual Fund. The fund has generated the highest returns among the gold ETFs in India in the last five years. It is a prudent choice for investors with a long-term investment horizon and seeking stable returns.
As of 28 February 2024, Kotak Gold ETF had an NAV of Rs. 53.10 per unit; the one-year return of this fund stood at 10.65%.
5. Axis Gold ETF
Axis Gold ETF is managed by Axis Mutual Fund. With a low expense ratio and efficient tracking mechanisms, this ETF is tailor-made for investors seeking a reliable and cost-effective gold investment option. As of 28 February 2024, the NAV of Axis Gold ETF stood at Rs. 53.25 per unit, whereas the one-year return stood at 10.56%.
The bottom line
Gold ETFs, with their convenience and liquidity, stand out as viable tools for those looking to expose their investments to gold prices but do not want to risk buying physical gold. However, as with any other investment option, you must carefully analyse the fund’s fundamentals, associated risks, and prevailing market conditions before investing.
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