Gold has always been a favourite investment option in India—be it in the form of jewellery, coins, or digital gold. But in recent years, people have started exploring modern and smarter ways of Gold investing in 2025—Gold ETFs and Gold Mutual Funds.
As we enter 2025, many investors are wondering: Which one is better—Gold ETF or Gold Fund? Let’s break this down in simple terms so you can make a smart decision for your portfolio.
🔍 What are Gold ETFs?
Gold Exchange Traded Funds (ETFs) are mutual fund schemes that track the price of physical gold. Each unit of a Gold ETF is equal to 1 gram of gold (usually), and it is traded on the stock exchange, just like shares.
Key Features of Gold ETFs:
- Listed on NSE/BSE
- Requires demat and trading account
- Real-time price movement
- Backed by 99.5% pure physical gold
- Low expense ratio (around 0.5% or less)
🔍 What are Gold Mutual Funds?
Gold Mutual Funds, also called gold savings funds, are open-ended mutual fund schemes that invest mainly in Gold ETFs. The key difference is: you don’t need a demat account to invest in them.
Key Features of Gold Mutual Funds:
- No demat or trading account required
- Easy to invest via SIP or lumpsum
- Slightly higher expense ratio (1%–1.5%)
- Suitable for first-time mutual fund investors
📊 Gold ETF vs Gold Mutual Fund – Quick Comparison
| Feature | Gold ETFs | Gold Mutual Funds |
| Investment Mode | Exchange-traded | Mutual fund house |
| Demat Account Required | Yes | No |
| Liquidity | High (real-time trading) | Lower (T+1 or T+2 redemption) |
| Expense Ratio | 0.3% – 0.5% | 1% – 1.5% |
| NAV Tracking | Real-time | End of day NAV |
| SIP Option | Not available | Available |
| Ideal For | Active investors | New/inactive investors |
💡 Which One Should You Choose in 2025?
Let’s evaluate based on current market conditions:
✅ If You Are a Tech-Savvy or Active Investor:
- You have a demat account
- You want real-time gold pricing
- You want low cost of investment
👉 Go for Gold ETFs
Example: Nippon India Gold ETF, HDFC Gold ETF, SBI Gold ETF
✅ If You Are a Beginner or Passive Investor:
- You don’t want to manage a demat account
- You prefer investing via SIP
- You’re okay with slightly higher fees for convenience
👉 Choose Gold Mutual Funds
Example: Axis Gold Fund, Kotak Gold Fund, HDFC Gold Fund
📈 Performance Analysis – 3-Year CAGR (As of Early 2025)
| Fund Type | Average 3-Year CAGR Return |
| Gold ETFs | 12% – 14% |
| Gold Mutual Funds | 11.5% – 13% |
Note: Returns vary slightly due to expense ratio differences and NAV calculation timing.
🛡️ Taxation Comparison
Both Gold ETFs and Gold Mutual Funds are taxed as non-equity mutual funds:
- Short-Term Capital Gains (STCG) (if held < 3 years): Taxed as per your income slab.
- Long-Term Capital Gains (LTCG) (if held ≥ 3 years): 20% tax with indexation benefit.
So, taxation is identical for both options.
🧠 Final Verdict: What’s Right for You?
| Your Profile | Suggested Investment |
| Beginner with no demat | Gold Mutual Fund |
| Experienced, cost-conscious trader | Gold ETF |
| SIP-based gold investment | Gold Mutual Fund |
| Looking for real-time pricing | Gold ETF |
📝 Conclusion
In 2025, both Gold ETFs and Gold Funds are great ways to diversify your investment portfolio with gold, minus the hassle of storing physical gold. Your choice depends on your comfort level, cost preferences, and whether you want to go active or passive.
💡 Pro Tip: If you want the best of both worlds, invest a portion in Gold ETFs (for growth) and some in Gold Mutual Funds (for SIP flexibility).
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