The Role of Gold ETFs vs Gold Mutual Funds Which is Better? Speaking of diversifying your portfolio, gold continues to be the most trusted option for Indian investors. But the main concern is not about the trust, it’s about if you should invest in Gold ETFs or Gold Mutual Funds? Both are popular choices for mutual funds investment in India, still they work in different manners.
What Are Gold ETFs?
Gold Exchange Traded Funds (ETFs) are flexible funds that track down the domestic gold prices and are traded on stock exchanges like shares. Here is the reason why many investors in India prefer them:
You own the gold digitally and there is no need to worry about the storage.
Prices are connected closely to the real-time gold rates in the market.
You need a demat account to buy or sell them easily.
Lower expense ratio as compared to gold mutual funds.
What Are Gold Mutual Funds?
Gold Mutual Funds mainly invest in Gold ETFs for you, in which they don’t need you to have a demat account. Here is how they differ from the gold ETFs:
They are simpler for beginners because they can invest through SIPs or lump sums.
They are well managed by professional and skilled fund managers.
They have a bit more expense ratio because of the active management fees.
NAV is declared at the end of the day, which is different from the real-time trading in ETFs.
The Role of Gold ETFs vs Gold Mutual Funds Which is Better
| Feature | Gold ETFs | Gold Mutual Funds |
|---|---|---|
| Mode of Investment | Stock exchange | Fund companies |
| Account Requirement | Demat account is compulsory | Demat account not required |
| Pricing | Real-time | End of day NAV |
| Expense Ratio | Low | A bit higher |
| Liquidity | Higher by trading anytime during market hours | Redeemable via AMC at day-end NAV |
Which One Should You Pick?
Pick Gold ETFs if:
You find it easy to use a demat account.
You want low costs on expense ratios.
You prefer instant freedom while trading.
Pick Gold Mutual Funds if:
You don’t have a demat account and you find it confusing to use.
You want to make an investment through SIPs or lump sums.
You want a professional fund manager to handle buying or selling of ETFs.
Key Things to Keep in Mind
Both gold ETFs and Gold Mutual Funds help you cover against the inflation rate and diversify your portfolio.
The taxation process is the same for both, but they are treated as non-equity funds.
Long-term capital gains usually after 3 years attract 20% tax with indexation.
Taxation on Gold Mutual Funds – AMFI India
If you are thinking about your best mutual fund portfolio strategy for 2025, then it’s a smart move to consider your risk taking ability, ease of investment, and other expenses.
Final Thoughts
Gold ETFs are Gold Mutual Funds both are helping you invest in gold without going through any physical troubles. The right choice always depends on your comfort level and style of investment. Make sure to do your own research, compare expense ratios from different funds, and always monitor how to choose right mutual fund in India before investing in them.