Best Gold Mutual Funds in India

Gold is regarded as a haven for investment purposes. This is primarily due to the fact that many people regard it as a secure store of value. Gold has also helped investors protect their money against short-term market risks in a few instances when it has moved in the opposite direction as the equity markets.

There are a variety of ways to invest in gold. Gold can be purchased in the form of coins, bars, and jewellery. Gold can also be purchased through digital gold, gold mutual funds, ETFs, and sovereign bonds. You can invest in gold without actually owning it if you use these methods. Before investing in mutual funds, regardless of where you invest, you must exercise extreme caution.

In this blog, we have compiled a list of the Best Gold Mutual Funds in India in 2023. Investing in some of the Best Gold Mutual Funds in India can be beneficial for investors who do not want to own the yellow metal at any stage.

Read on to find out more about what are gold mutual funds.

Meaning of Gold Mutual Funds

Gold fund is a type of investment fund that holds assets related to gold. Gold funds can be in the form of stocks, physical gold, stocks of gold mining companies, etc.

These rely on the instruments that are directly linked to the prices of gold and invest in gold bullion. Returns are aligned with the price of gold. Someone who wants to invest in Gold in a paperless manner can reap the benefits of gold mutual funds.

Top 5 Gold Mutual Funds in India

Factors to Consider Before Thinking About Mutual Fund Investment in Gold

• Fluctuations in Gold Prices

The demand and supply of gold all around the world affect gold prices. This causes fluctuations in gold prices. Just like any other investment option, even the best gold funds in India face market risk and price fluctuation.

Often the market price of gold depends upon circumstances beyond the control of gold producers. However, in the long term, risks, fluctuations, and losses even out for most investment options.

•  No Physical Gold

Investment options like gold funds help us to stay invested in gold and benefit from the price movements in the commodity.

If you don't want to own gold in physical form and still remain invested in the commodity, gold mutual funds, along with digital gold, gold ETFs, and gold bonds, may be beneficial.

• Taxation on Gold ETF

Taxes on long-term capital gains are taxable at 20% plus cess with indexation benefit, whereas short-term gains are taxable at slab rates applicable to the investor. A period longer than three years is considered long-term for gold funds.

• Taxation on Gold FoF

Under the current Income Tax regime in India, a FOF is treated as a non-equity fund and consequently taxed accordingly. The short term is defined as a period of fewer than three years.

So, if you withdraw before three years, it will be considered short-term capital gains (STCG), and it will be added to the taxable income and taxed as per your income tax slab. Long-term capital gains, withdrawal after three years from the date of investment, are taxed at 20% with the benefits of indexation.

You may also want to read: How are Different Forms of Gold Investments Taxed

Overview Of The Top Gold Mutual Funds of 2023

 1) Axis Gold Direct Plan-Growth

Axis Gold Direct Plan-Growth is an "Other" Mutual Fund Scheme launched by Axis Mutual Fund and is considered one of the Best Gold Mutual Fund in India. The scheme seeks to generate returns that closely correspond to returns generated by Axis Gold ETF.

 2) HDFC Gold Direct Plan-Growth

HDFC Gold Direct Plan-Growth is in the mutual fund category of Fund-of-Fund, which will buy or sell units of HDFC Gold ETF.

The Scheme seeks to generate capital appreciation by investing in units of HDFC Gold Exchange Traded Fund. The fund is suited for a minimum investment period of 3 years; however, there is no lock-in.

 3) Kotak Gold Fund Direct-Growth

Kotak Gold Fund Direct-Growth is an "Other" Mutual Fund Scheme launched by Kotak Mahindra Mutual Fund. The scheme seeks to generate returns by investing in units of Kotak Gold Exchange Traded Fund.

 4) SBI Gold Direct Plan-Growth

SBI Gold Direct Plan-Growth is an open-ended scheme that invests in SBI-ETF Gold primarily and allocates a small portion in short-term debt securities as well.

The Scheme seeks to provide returns that closely correspond to returns provided by SBI Gold. SBI Gold Fund Direct can be considered by investors looking for long-term capital appreciation along with portfolio diversification and hedging opportunities by investing in Gold.

 5) ICICI Prudential Regular Gold Savings (FOF) Direct-Growth

ICICI Prudential Regular Gold Savings (FOF) Direct-Growth is an "Other" Mutual Fund Scheme launched by ICICI Prudential Mutual Fund.

The scheme aims to generate returns by investing in units of the ICICI Prudential Gold Exchange Traded Fund.

Final Words

This was the list of the finest Gold Mutual Funds of 2023. In conclusion, Mutual Funds that invest in Gold are known as Gold Funds. In India, the majority of Gold Funds invest in domestic gold ETFs. Only a few world's Gold Funds provide you with international exposure. Research and invest in accordance with your objectives.