Gold has grabbed all the spotlights in the last couple of years.
Amidst the uncertain times of the COVID-19 pandemic, the precious yellow metal gained 28.0% in 2020.
Then, in 2021, it took a breather before ascending 13.9% once again after Russia invaded Ukraine in 2022.
Moving ahead in 2023, with rising geopolitical tensions in the Middle East after the Israel-Hamas war, gold gained another 15.4% in 2023.
In 2024, with geopolitical tension escalating and the markets anticipating a rate cut by the US Federal Reserve (Fed), gold gained another 20.6%.
And last year, i.e. 2025, gold clocked a stunning 74.7% absolute returns due to:
- Tensions between India and Pakistan (following a deadly terror attack on tourists in Pahalgam in April),
- Trump 2.0 protectionist policies
- Higher tariffs and the expected macroeconomic uncertainty
- Rising global debt-to-debt ratio
- Central bank net buying over 5,100 tonnes in the last five years, as part of their reserve management, has also proved supportive for gold
- Plus, abetted by a cumulative 75 basis points (bps) and 125 bps rate cut by the Fed and the RBI, respectively
As a result, individuals also flocked to gold bars, coins, and gold ETFs, considering them to be a hedge against inflation and a store of value amid uncertainty.
The 74% Phenomenon: Why 2025 Was Gold’s Boldest Year
The returns clocked by gold in 2025 are the highest seen in the last decade.
2025: Bold Year for Gold
Source: MCX Spot Gold prices
In 2026, too, the current geopolitical and macroeconomic environment appears to be in favour of gold.
The Central Bank War Chest: Why Institutions Are Hoarding Bullion
As per the World Gold Council (WGC), the combination of lower interest rates and a weaker dollar, paired with heightened risk aversion, would create a continued supportive environment for gold.
If you are intrigued and excited by the gold dream run and wish to invest in gold the smart way, then gold funds are your best bet.
The Gold ETF vs. Gold Savings Fund Dilemma: Making a Prudent Choice
Gold ETFs aim to track the domestic price of physical gold; they are passively managed and make direct investments in Gold.
To invest in Gold ETFs, you need a demat Account and a trading account. The purchase order can be placed through your broker, just like when you buy shares on a recognised stock exchange.
When you buy a gold ETF unit/s, it will reflect in your demat account (on a T+1 basis).
The units purchased are backed by 0.995 finesse of physical gold by the respective fund house.
The physical gold is held in vaults by an appointed custodian on behalf of the ETF, and is insured and valued periodically, as per capital market regulations.
Gold ETFs are a worthwhile option to gain exposure to gold without having the hassle of physically holding it.
However, note that, in the case of gold ETFs, the Systematic Investment Plan (SIP) option is not available.
Here’s where gold savings funds prove useful.
They are fund of funds investing in their underlying gold ETFs, whose benchmark ultimately is the price of physical gold.
And to invest in gold savings funds, you do not need a demat and trading account. So you save on demat account charges, brokerage, etc.
The units can be bought directly by approaching a fund house or a mutual distributor/agent. All you pay is the expense ratio, which, if you opt for the direct plan, is lower than a regular plan.
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.
In times where gold prices have already near their all-time high, it makes sense to take the SIP route when approaching gold rather than investing a lump sum.
SIPs would help you in rupee-cost averaging while you approach it as a portfolio diversifier in your wealth creation journey.
With a gold savings fund, the investment objective would be to generate returns that closely correspond to the returns generated by the underlying gold ETF, which in turn tracks the prices of domestic physical gold, subject to a tracking error. If gold appreciates, you benefit.
Now, coming to which are the top 3 gold savings funds in India to consider…
The 2026 Watchlist: 3 Funds Delivering 17% CAGR
Among the galore of options available, the top 3 based on AUM and 10-year returns are as follows:
#1 SBI Gold Fund
Launched in September 2011, the SBI Gold Fund is a popular gold mutual fund currently managing assets worth Rs 10,805 crore as of December 2025, with an expense ratio as low as 0.10% under the direct plan.
Since its inception, the fund has clocked a 10.4% CAGR and over 10 years 17.2% CAGR, almost in line with the category average as of 5 January 2025.
The fund is holding 99.9% of its assets in the underlying SBI Gold ETF.
Raviprakash Sharma has been managing the fund since its inception.
He has over 12 years’ experience in the Indian capital markets in various capacities, including Portfolio Management and Dealing in equity shares on behalf of clients. He is a Chartered Accountant (CA), plus a Charter holder of the CFA Institute, USA.
#2 HDFC Gold ETF Fund of Fund
This scheme was launched in January 2013 and today manages assets over Rs 8,501 crore as of December 2025, with an expense ratio of 0.18%.
Since its inception, the HDFC Gold ETF Fund of Fund has clocked a 10.4% CAGR, and over 10 years 17.1% CAGR, in line with the category average as of 5 January 2025.
The fund is holding 99.9% of its assets in the underlying HDFC Gold ETF.
Nandita Mendez and Arun Agarwal co-manage the fund.
Nandita is a commerce graduate and a CA with a collective experience of over 3 years in equity dealing and auditing.
Arun has a collective experience of over 27 years in equity, debt and derivative dealing, fund management, internal audit and treasury operations. He, too, is a commerce graduate and a CA by qualification.
#3 Nippon India Gold Savings Fund
Launched in March 2011, formerly known as Reliance Gold Savings Fund (before Nippon Life Insurance bought 75% stake in Reliance Mutual Fund, which was a part of Reliance Capital), is the oldest gold savings fund in India.
As per its November 2025 portfolio, it manages assets worth Rs 4,849 crore with an expense ratio of 0.13% under the direct plan.
Since its inception, the fund has clocked a 10.7% CAGR, and over 10 years, 17.0% CAGR, in line with the category average as of 5 January 2025.
The fund is holding 99.9% of its total assets in the underlying Nippon India Gold BeES, which itself is the oldest gold ETF in India – originally launched as the Benchmark Gold BeES in March 2007.
Currently, Himanshu Mange manages the fund (since December 2023), and before that, several other fund managers have managed the fund.
Himanshu has over 5 years of experience in fund management and is a dealer – ETFs. He is a commerce graduate and a CA by qualification.
Your Portfolio Strategy: The 5-10% Asset Allocation Golden Rule for 2026
Note that only funds with a 10-year track record are analysed here, as this is an important criterion when you are approaching the precious metal.
Having a long-term view of 5-10 years or more is necessary, as there could be times when it may move flat or be volatile.
Moreover, these are funds from mutual fund houses known to be following robust investment processes & systems.
That said, please remember past performance is not indicative of future returns.
When you approach gold, pay attention to the allocation best suited for you.
Ideally, it make sense to allocate it makes sense to allocate 5-10% of your entire portfolio to gold, rather than making ad hoc investments.
Invest sensibly, considering your risk profile, broader investment objective and time horizon before investing.
If you are not sure how to go about it, reach out to a SEBI-registered investment adviser.
Happy Investing.
Note: We have relied on data from www.valueresearchonline.com, www.financialexpress.com, and the factsheets published by the respective fund houses throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
Disclaimer:
Disclaimer: The above content is for informational purposes only. Mutual Fund investments are subject to market risks. Please consult your financial advisor before investing.
Rounaq Neroy has over 20 years of experience in the financial markets and investments. He is a close observer of the Indian economy and writes deeply on the capital markets, mutual funds, stocks, precious metals, asset allocation, wealth management, and investment strategy. His editorials provide interesting, actionable investment ideas to guide readers in the journey of wealth creation and make wise decisions. Rounaq was the Head of Content at PersonalFN (Quantum Information Services Pvt. Ltd.), which also owns Equitymaster.com – India’s oldest and trusted equity research house.