Do you want an exposure to gold without owning any physical gold? Yes, you can invest in gold through Gold Mutual Funds without owning it physically.
In 2025, these mutual funds maintain their popularity by their ability to provide portfolio diversification, inflation protection and liquidity.
You can gain easy exposure to this precious metal by investing in gold-related securities and gold ETFs while enjoying professional management and liquidity.
Keep reading this article and learn more about Gold MF and explore its advantages and the best funds to invest in 2025 for your portfolio.
Overview of Gold Mutual Funds
Gold Mutual Funds are investment vehicles that let you invest in Gold securities like Gold ETFs ( Exchange Traded Funds). These are the investment schemes that allow you to invest in gold without physically owning it. It is like an alternative way to buy and store gold for you, but not physically.
It provides you with indirect investments in gold. This mutual fund invests in the stocks of gold-mining companies, units in gold ETFs and other instruments. It is an open-ended mutual fund and offers high liquidity on the investments.
Through these mutual funds, you can invest without the need for a demat account, making it beginner-friendly. Managed by its experienced fund managers, these funds also provide you with a SIP investment option. You can start SIP in these mutual funds and invest a small amount regularly, as little as ₹100-₹500.
Historical Performance of Gold Mutual Funds
The historical performance of Gold mutual funds in India has mostly been similar to the price of gold. These mutual funds are reliable as they protect against inflation and market irregularities while providing diversification.
The key achievements of these funds in 2025 are:
- 1-Year Returns: Delivered impressive short-term performance, ranging between 31%-40%.
- 3-Year CAGR: It has delivered compounded annual growth rates of 19%-24%, showing stability.
- 5-Year CAGR: These mutual funds have generated a CAGR of 7.5%-13% over the past 5 years, displaying the reliability of the funds.
- 10-Year CAGR: Over the long term, the fund has delivered 6%-8% CAGR, and it has been consistent in diversification rather than being a high-growth fund.
How to invest in Gold Mutual Funds?
Looking for a guide to invest in gold, follow the steps given below to make your first investment in Gold Mutual Funds in 2025:
- Step 1: First, complete your KYC (mandatory process). You can do it online or offline.
- Step 2: Search for the gold mutual funds and choose the reliable one. Align the selected fund with your goals and risk tolerance.
- Step 3: Decide on the investment modes- Lumpsum or SIP (Systematic Investment Plan).
- Step 4: Select the right AMC for the investments by searching and comparing gold mutual funds offered by different AMCs.
- Step 5: Make the payment of your investments through UPI, debit cards or cheque.
- Step 6: Monitor your performance, track your units and their values regularly and check their alignment with your goals.Are Gold Mutual Funds a Good Investment?
Are Gold Mutual Funds a Good Investment?
Investments in Gold Mutual Funds are good in 2025 because of the following advantages these funds offer:
Protection Against Inflation
These mutual funds protect against the irregularities of the equities, as they perform well during market volatility.
Liquidity and Convenience
Similar to physical gold, you can buy and sell these mutual funds at the NAV during the trading time, providing high liquidity.
Cost Effectiveness and Accessibility
These mutual funds do not include extra charges, which physical gold involves, such as making charges, GST and storage fees.
Professional Management
Fund managers of the gold funds provide investors with expert advice and review on the investment, which gives investors convenience.
Tax Benefits
Capital gains over the long term (over three years) are taxed at 20% with indexation benefits, which is more reasonable than physical gold.
Best Gold Mutual Funds to Invest
Listed below are the best gold mutual funds to invest in 2025:
LIC MF Gold ETF FoF Direct - Growth
The inception date of this fund is January 1, 2013. This mutual fund has delivered 3-Year returns of 20.51%. It carries a high risk level. It has an AUM of Rs 71.63 crore. The investments start at a minimum SIP amount of Rs 200. It has a 0.20% expense ratio.
Aditya Birla Sun Life Gold Fund
The inception date of this fund is March 20, 2012. This mutual fund has delivered 3-Year returns of 19.85%. It carries a high risk level. It has an AUM of Rs 428.10 crore. The investments start at a minimum SIP amount of Rs 100. It has a 0.20% expense ratio.
Axis Gold Direct Plan - Growth
The inception date of this fund is January 1, 2013. This mutual fund has delivered 3-Year returns of 19.79%. It carries a high risk level. It has an AUM of Rs 706.42 crore. The investments start at a minimum SIP amount of Rs 100. It has a 0.17% expense ratio.
SBI Gold Direct Plan - Growth
The inception date of this fund is January 1, 2013. This mutual fund has delivered 3-Year returns of 19.79%. It carries a high risk level. It has an AUM of Rs 2,583.37 crore. The investments start at a minimum SIP amount of Rs 500. It has a 0.10% expense ratio.
Invesco India Gold ETF FoF Direct - Growth
The inception date of this fund is December 5, 2011. This mutual fund has delivered 3-Year returns of 19.73%. It carries a high risk level. It has an AUM of Rs 114.20 crore. The investments start at a minimum SIP amount of Rs 500. It has a 0.10% expense ratio.
What are the Disadvantages of Gold Mutual Funds?
There are several risks included in the Gold Mutual Funds, some of them are:
- No Physical Gold Ownership: You do not get the actual gold from the gold funds to hold or keep with yourself.
- Expense Ratio: These mutual funds charge management fees and an expense ratio, which can be higher than gold ETFs.
- Market Volatility: The value of your investment depends on the price of gold, which can fluctuate with changes in the gold price.
- No Passive Income: Gold does not give dividends or interests, its profit depends on the price at which it is sold.
- Limited Control: The fund managers are involved, which means you may not have total control over your investment.
- Lack of Emotional Value: For some investors, gold is not just an investment, especially in India. Funds can not fulfill the emotional values.
Conclusion
In short, Gold mutual funds let you enjoy the benefits of the investments in gold while securing you from the complexity of owning some physical gold. These mutual funds provide investors with protection from inflation and market fluctuation, while you can benefit from portfolio diversification.
You can earn more growth in these mutual funds by investing in them through SIPs. Start SIP now to invest in small amounts and benefit from compounding over time.
You must be logged in to post a comment.