In the year 2025, gold has clocked 69.3% absolute returns so far (as of 1 December 2025). This is the highest annual return by the precious yellow metal in the last decade. In fact, the returns are even higher than what we witnessed in 2019 and 2020, the years when the COVID-19 pandemic gripped the world.
A variety of factors have driven gold prices up in the last few years – the Russia-Ukraine war, trade wars due to higher tariffs imposed by Trump 2.0, geopolitical tensions, and the impact of all this on global economic growth.
The US Federal Reserve, having cut the interest rates cumulatively by 50 basis points (bps) so far this year, has also supported the gold price. A weak US dollar and high debt-to-GDP ratio of certain major economies have also encouraged
central banks to add gold to their reserve management, pushing prices higher.
Traditionally, gold has always been considered as a safe haven, a hedge against inflation, a store of value amid economic uncertainty, and a portfolio diversifier. Thus, the investment demand for gold has gone up.
If you are also looking to invest in gold the smart way, then here are some of the well-performing gold mutual fund mutual funds for your 2026 watchlist. In this article, we have mainly focused on gold saving funds (not gold ETFs), which permit you to take the SIP route as well as make lump sum investments.
Gold Savings Funds
Gold savings funds, also known as gold mutual funds, function like a fund of funds scheme investing in their underlying gold ETFs. The gold ETFs, in turn, benchmark their performance against the price of physical gold.
Given this, the portfolio of the gold ETF becomes the portfolio of the gold savings fund. The investment objective is to generate returns that closely correspond to the returns generated by the underlying gold ETF.
Unlike a gold ETF, where you need a demat and trading account to invest, you can invest in a gold savings fund directly with the fund house or your mutual fund distributor. So, you do not have to bear demat account charges, brokerage, etc. All that you pay is the expense ratio and, on redemption, an exit load.
Your minimum investment in the gold savings fund can be as little as Rs 500. Some fund houses have even sachetized this further, allowing lump sum as well as SIP as little as Rs 100. At a time when gold prices have scaled high, taking the SIP route particularly makes sense, or you could consider making staggered lump sum investments.
Which gold savings funds or gold mutual funds stand out in India?
Gold savings funds, on average, have clocked 16.5% CAGR in the last decade. Over the last 5 years
and 7 years, the compounded average growth rate of 20.2% and 21.7%, respectively.
That said, based on long-term returns, there are certain gold savings mutual funds that stand out…
- LIC MF Gold ETF FoF
- SBI Gold Fund
- HDFC Gold ETF FoF
- ICICI Pru Regular Savings Fund
- Aditya Birla Sun Life Gold Fund
The underlying portfolios of these, i.e. LIC Gold ETF, SBI Gold ETF, HDFC Gold ETF, ICICI Prudential Gold ETF, and Aditya Birla Sun Life Gold ETFs have fared well, in line with the gold-India benchmark, which is why these funds deserve attention.
These funds have a long performance track record and showcase an appealing performance over the long term – 5 years and 10 years. They have lived up to their objective of providing returns that, before expenses, closely correspond
to the returns of their respective underlying gold ETFs and benchmark. These are funds from mutual fund houses known to be following robust investment processes & systems.
Keep in mind, past performance is not indicative of future returns when investing in mutual funds. Consider the asset allocation best suited for you when approaching gold. Ideally, not more than 10-15% of your entire portfolio should be in gold savings funds (or gold ETFs).
Make sure you are approaching gold sensibly.
Be a thoughtful investor.
Happy investing.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here…
The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary
