Plan Your Gold Investment This Diwali | Compare gold ETF, gold MF returns on Rs 10,000/month investment over 10 years; which do you think is more lucrative?
Top Gold ETF vs Top Gold Mutual Fund in 10 Years: Gold ETF and gold mutual funds track the price of physical gold of high purity. Yet, both function differently and deliver different returns. The common thing between the two is that both allow investors to invest in gold's digital form.
Top Gold ETF vs Top Gold Mutual Fund Calculator: The traditional way of investing in gold in India is to buy it in its physical form. Some people buy gold coins, others purchase gold bars, but the majority of Indians prefer to have gold in the form of jewellery. But when someone has gold in its physical form, they may face issues that may affect its value in the future. Gold can lose its sheen, and it may not be sold at the same rate for which it was bought. Since gold is a precious metal, the holder also feels the fear of it being stolen or missing. But what if they want to benefit from gold price appreciation without possessing it in physical form. Such investors have the option of investing in gold's digital form through gold ETFs, gold mutual funds, or Sovereign Gold Bonds (SGBs). In this write-up, we will discuss how gold ETF and gold mutual funds are different, which has been the top gold ETF and the gold mutual fund in 10 years in terms of highest annualised returns (CAGR), and what Rs 10,000 monthly investment in each of them has given in that period.
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Gold ETF
Golf ETFs are a type of mutual fund that can be traded in a share market like any other stock. While most ETFs follow some index, gold ETFs follow the price of 99.5 per cent pure gold. As per Securities Exchange Board of India (Sebi) categorisation of mutual funds, a gold ETF scheme issues units against gold held. Each unit will represent a defined weight in gold, typically one gramme.
Gold ETF
Each gold ETF scheme can hold gold in the form of physical gold or gold-related instruments.
Since gold ETFs trade in the share market, one needs to have a demat account to trade them. These ETFs can be bought and sold only during trading hours. After the market closes, the price of gold ETF doesn't change till the market opens the next day. Even though gold ETFs follow the price of domestic physical gold, their price remains the same throughout the world.
Gold mutual funds
Like gold ETFs, gold mutual funds also invest in gold of 99.5 per cent purity. But gold mutual funds invest in gold only through ETFs. Gold funds that directly invest in the stocks of gold mining, processing, refining, and packaging companies fall under the thematic category and are different from gold mutual funds.
Gold mutual funds
Mutual funds allow SIP and lump sum investments. As far as the taxation on gold mutual funds is concerned, if NAVs are purchased after March 31, 2025, and sold before 2 years, the gains will be added to the taxable income and taxed at applicable income tax slab rates.
Best gold ETF in 10 years
The best gold ETF in terms of annualised returns is LIC MF Gold ETF.
It has given 10.17 per cent annualised returns in the 10-year period.
The ETF has assets under management (AUM) of Rs 151 crore, while its net asset value (NAV) is Rs 6,981.5751.
Best gold ETF in 10 years
Benchmarked against the domestic price of gold, the ETF has given 6.88 per cent annualised returns since its inception in November 2011.
With an expense ratio of 0.41 per cent, the fund has Rs 10,000 as the minimum investment.
It has 99.95 per cent of its investments in commodities and 0.05 per cent in cash and cash equivalent.
Best gold mutual fund in 10 years
The best gold mutual fund in terms of highest annualised returns is SBI Gold Fund - Direct Plan.
The fund has given 9.82 per cent annualised returns in the 10-year time frame.
The gold fund has an assets base of Rs 2,245 crore, while its NAV is Rs 23.7850.
Best gold mutual fund in 10 years
Benchmarked against the price of the domestic gold, the fund has given 6.97 per cent annualised returns since its launch in January 2013.
At an expense ratio of 0.10 per cent, the fund has a minimum SIP investment of Rs 500 and the minimum lump sum investment of Rs 5,000.
Value of Rs 10,000 monthly investment in LIC MF Gold ETF in 10 years
A Rs 10,000 monthly investment in LIC MF Gold ETF in 10 years, or a total investment of Rs 12,00,000, has grown to Rs 23,57,603.
Value of Rs 10,000 monthly SIP investment in SBI Gold Fund - Direct Plan in 10 years
A Rs 10,000 monthly SIP investment in SBI Gold Fund - Direct Plan in 10 years has given a total of Rs 23,36,733.