On April 18, 2025, at the time of writing this article, gold prices in India have breached the Rs 96,000 per 10 grams, driven by a host of domestic and global factors. In the international market, gold prices have crossed USD 3,300 an ounce level. There are many big reasons behind this unprecedented rise at the global level. Growing geopolitical uncertainty, aggressive buying of gold by central banks around the world, and economic instability have increased the shine of gold.

If we talk about gold in India, the metal is a symbol emotions and security. Every family in India wants to have some gold in its safe. But of late, the old thinking of investors to possess physical gold has changed. Along with physical gold, people are now also looking at such options where investment is easy, risk is low and returns are stable — and this is where the role of digital gold and gold mutual funds becomes important.

Gold ETFs: A smart investment option

Gold ETFs are essentially mutual funds that track gold prices. Investors can buy and sell them just like in the stock market, without having to worry about storing gold at home, in a locker, or its purity. But the question is — have gold ETFs really given returns as good as or better than physical gold?

Also read: Gold ETFs Vs Physical Gold: Where to invest? 10 to 15-year returns compared

To find the answer, we analysed the performance of five of India’s oldest gold ETFs over a period of 15 to 18 years. These funds are:

These gold ETFs have delivered returns ranging from 11% to 13% CAGR over the last 16 to 18 years. Some of these ETFs have outperformed physical gold when the returns are compared with that of physical gold since the launch of each of these funds.

5 oldest gold ETFs in India: How their 16–18 year returns stack up against physical gold

1. Nippon India ETF Gold BeES

Fund’s launch date: 8 March 2007 (Age – 18 years 1 month)

Return since launch: 12.44% CAGR

Now, if we see gold price rise since 8 March 2007, the precious metal has jumped from Rs 10,800 per 10 grams to over Rs 96,000 per 10 grams.

Returns on investment in physical gold since 8 March 2007: 12.91% CAGR

2. UTI Gold Exchange Traded Fund

Fund’s launch date: 12 March 2007 (Age – 18 years 1 month)

Return since launch: 12.62%

Gold prices during this last about 18 years have risen from Rs 9,400 to Rs 96,000 per 10 grams.

Returns on investment in physical gold since 18 May 2009: 13.78% CAGR

3. Kotak Gold ETF

Fund’s launch date: 27 July 2007 (Age – 17 years 8 months)

Return since launch: 13.24%

During this period, gold prices have moved up from Rs 10,800 per 10 grams to Rs 96,000.

Returns on investment in physical gold since 27 July 2007: 12.91% CAGR

4. Quantum Gold Fund

Fund’s launch date: 22 February 2008 (Age – 17 years 2 months)

Return since launch: 11.69%

If we see gold price movements in the last 17 years, the yellow metal has surged from Rs 12,500 to Rs 96,000 per 10 grams now.

Returns on investment in physical gold since 8 March 2007: 11.99% CAGR

5. SBI Gold ETF

Fund’s launch date: 18 May 2009 (Age – 15 years 11 months)

Return since launch: 11.30%

Physical gold prices during this period (nearly 16 years) have risen from Rs 14,500 to Rs 96,000 per 10 grams.

Returns on investment in physical gold since 18 May 2009: 11.07% CAGR

(Data source – Value Research)

Also read: Gold ETFs vs Gold Funds: Where should you invest in 2025?

Physical gold vs gold ETFs: Which is better?

If you look at the returns of physical gold in the last 16–18 years, it has also been around 11–14% annually. That is, gold ETFs not only matched the returns but also outperformed in the long term. Additionally, the convenience of keeping and selling ETFs make them more attractive. While there are concerns of making charges, storage and security in physical gold, there are no such problems in gold ETFs.

Benefits of investing in gold ETFs:

No worries of purity or theft

Completely digital and transparent transactions

Regulated by SEBI

Entry and exit at any time through the stock market

Diversification in the portfolio at low cost

Risks:

However, one needs to exercise caution while investing in gold ETFs as risks also involve in such products. So which are they?

One of the risks is that volatility in gold prices directly affects the returns of the fund. One might see relatively lower returns in the long term compared to equity.

Who should invest in gold ETFs?

-People who want to invest in gold but want to avoid the hassle of owning physical gold

-Investors with an investment time horizon of 5 years or more

-Those who do not have any share of gold in their portfolio

-People who want to protect their investments from inflation and global risks

Also read: Trump tariffs drive investors to Gold! Here are 3 Gold ETFs to invest in right now

Summing up…

Gold ETFs have come a long way in India now – and their performance shows that if you think long-term, they can be a stable, convenient and safe option. At a time when physical gold has become expensive and global volatility is rising, gold ETFs can prove to be a wise decision for investors.