Gold has always been a go-to investment for anyone looking for stability, value, and a reliable hedge against uncertainty. Incorporating the benefits of gold investment, it remains a top choice for diversifying portfolios.
In the past, investing in gold meant buying jewelry, coins, or gold bars—physical assets passed down through generations. But as the world goes digital, there’s a new, modern way to invest in gold: Gold Exchange-Traded Funds (ETFs) and Gold Mutual Funds. These options allow investors to tap into gold’s potential without the hassle of storing physical gold or worrying about security.
In the post-pandemic world, interest in gold as an investment has skyrocketed.
According to recent data, global demand for gold ETFs increased by 20% in the past year, driven by inflation fears and economic uncertainties. This trend reflects gold’s enduring appeal as a safe haven. This shift has opened up new, streamlined options that cater to today’s fast-paced, tech-savvy investors.
As we move further into 2025, gold ETFs and gold funds have emerged as leading choices, each offering its own set of benefits.
But how do they stack up, and which one is right for you? Let’s break it down and find out!
Understanding Gold Investments: Physical Gold, Gold ETFs and Gold Mutual Funds
Investing in Physical Gold
For many people, investing in gold means buying gold jewelry, coins, or bars—things that can be passed down through generations or kept as a backup plan. They usually buy it when they want to save up for the future or just have something safe in case the economy goes sideways.
You’ll find them heading to a jeweler or gold shop to pick up some shiny pieces. Once they’ve got it, they’ll stash it somewhere safe at home or even rent a locker at the bank.
The idea is that, if the economy takes a hit, their gold will hold its value. While it’s a hands-on way of saving, it comes with the need to look after gold and make sure it’s protected.
Investing in Gold ETFs
Gold ETFs (Exchange-Traded Funds) are financial products that let you invest in gold without buying the actual metal. They track the price of gold and are traded on stock exchanges, just like stocks.
So, when you invest in a Gold ETF, you’re following how gold’s price moves, but you don’t have to worry about storing the gold itself.
Gold ETFs in 2025 are maintaining top-notch popularity because they’re easy, affordable, and give you a way to get in on gold without all the hassle.
Investing in Gold Mutual Funds
Gold Funds invest in mutual funds – gold-related assets—primarily mining stocks and other gold-linked companies. Active management involves fund managers selecting specific gold-related investments to maximize returns, while passive management typically tracks a gold-related index for steady performance. These funds are managed either actively or passively, depending on the strategy.
Gold Mutual Funds in 2025 have grown significantly, providing diversification and exposure to gold’s broader ecosystem, including gold mining and production.
Gold investment products, especially ETFs and Mutual Funds, have become particularly attractive in today’s economy, marked by post-pandemic recovery and inflation concerns. The price of gold has been a safe bet for many, and its significance as a hedge against uncertainty has never been more apparent.
Now that we have a basic understanding of what Gold ETFs and Gold Funds are, let’s dive deeper into how they compare on key factors like liquidity, costs, and risk profiles. Take a look at this table for instance:
| Aspect | Gold ETFs | Gold Mutual Funds |
| Investment Type | Passive (tracks gold prices) | Active or passive (invests in gold-related assets or stocks) |
| Trading | Traded on stock exchanges | Purchased through a fund house, can be bought via SIP |
| Liquidity | High (can be bought/sold anytime during market hours) | Medium (redeemed at the fund’s NAV) |
| Expense Ratios | Low (around 0.5% to 1%) | Higher (around 1% to 2.5%) |
| Tax Efficiency | Generally favorable for short-term holdings | Varies based on holding period and country |
| Risk Profile | Direct exposure to gold price fluctuations | Exposure to both gold and related assets (stocks, bonds) |
Listen to what the expert says:
Top Gold Investment Options in 2025
Top 5 Gold ETFs in 2025
Here are the top 5 gold ETFs that you can consider for investments in 2025:
| ETF Name | Expense Ratio (%) | 3-Year Returns (%) | 5-Year Returns (%) | AUM (INR Crores) |
| Nippon India ETF Gold BeES | 0.81 | 22.45 | 13.88 | 15,248 |
| HDFC Gold ETF | 0.59 | 22.65 | 13.97 | 6,615 |
| ICICI Prudential Gold ETF | 0.5 | 22.67 | 13.98 | 5,531 |
| Kotak Gold ETF | 0.55 | 22.63 | 14.08 | 5,319 |
| SBI Gold ETF | 0.65 | 23.7 | 13.2 | 2,516 |
Top 5 Gold Mutual Funds in 2025
Here are the top 5 gold mutual funds that you can consider for investments in 2025:
| Fund Name | Expense Ratio (%) | 3 Year Returns | 5 Year Returns | AUM (INR) |
| SBI Gold Fund | 0.42% | 16.82% | 13.78% | 2,583.37 Cr |
| Axis Gold Fund | 1% | 16.80% | 13.95% | 706.42 Cr |
| LIC MF Gold ETF Fund of Fund | 0.67% | 16.79% | 13.71% | 71.63 Cr |
| HDFC Gold ETF Fund of Fund | 0.49% | 16.67% | 13.86% | 2,765.21 Cr |
| ICICI Prudential Regular Gold Savings Fund (FOF) | 0.39% | 16.65% | 13.62% | 1,385.31 Cr |
| Category Average | 1.09% | |||
Comparison of Funds with their Category Average: The funds’ 3-year returns (ranging from 16.65% to 16.82%) are slightly above the category average of 1.09%. This indicates that the funds are performing significantly better than the typical gold fund category. Additionally, their 5-year returns align closely, showing consistent performance across the board.
Gold ETFs vs. Gold Mutual Funds: Which One’s Right for You in 2025?
When it comes to investing in gold, two big players are making waves—Gold ETFs and Gold Mutual Funds. Both are solid choices, but they each vibe differently with your investment style and goals. Let’s break it down!
Gold ETFs: Perfect for the Active Investor Who Loves Flexibility
Gold ETFs are for those who want easy access, low fees, and straight-up exposure to gold. They’re great for:
- Flexibility & Liquidity: If you want to buy or sell on a whim during market hours, Gold ETFs let you do that. You can trade like a pro and stay on top of things in real-time.
- Direct Gold Exposure: If you’re all about gold and want your investment to move with its price, Gold ETFs are like a mirror to gold’s value—no middleman or extra steps.
- Low-Cost, High-Impact: With expense ratios between 0.5% and 1%, Gold ETFs are pretty budget-friendly. If you’re looking to save on fees while riding the gold wave, this is your move.
- Loving the Stock Market Vibes: Gold ETFs are traded on exchanges, so if you’re into the market hustle and don’t mind checking in regularly, this will work for you.
Gold Mutual Funds: For the Long-Term Investor Who Wants More Variety
If you’re looking for something that offers a mix of gold with some extra flavor, Gold Mutual Funds are where it’s at. These are perfect for:
- Long-Term Diversification: If you’re not just about gold but want to be exposed to things like gold mining stocks, these funds have your back. They give you more variety in the gold ecosystem.
- Less Stress, More Management: If you’re not up for the rollercoaster of daily price movements and prefer a fund manager to do the heavy lifting, Gold Mutual Funds are a more chill, managed option.
- Regular, Steady Investments: If you like the idea of putting in small, regular amounts over time (like through SIPs), Gold Mutual Funds give you that flexibility. It’s a great way to grow your gold stash without feeling overwhelmed. Pro Tip: Use SIP calculator & lumpsum calculators to calculate estimated returns on your investments.
- Ready for Medium-Term: Since these funds aren’t as liquid as ETFs, they’re better for those willing to commit their money for a few years. You won’t be able to sell instantly like with ETFs, but you’ll benefit from the long-term game.
So, Which One Should You Go For?
- Pick Gold ETFs if: You’re an active investor who loves flexibility, low fees, and wants direct exposure to gold.
- Choose Gold Mutual Funds if: You’re in it for the long haul, want a mix of gold with other assets, or prefer a more hands-off approach.
Conclusion
At the end of the day, whether you’re all about the fast-paced, flexible nature of Gold ETFs or you’re more into the long-term, diversified approach offered by Gold Mutual Funds, both options are solid picks in 2025.
Gold ETFs offer a hands-on, low-cost way to ride the gold wave with direct exposure to its price, making them perfect for active investors who love staying on top of market movements.
On the other hand, Gold Mutual Funds provide a more relaxed, managed approach, combining gold with other assets for those looking for steady growth over the long haul.
Gold has always been a go-to safe haven, and now, with these modern investment options, it’s easier than ever to add it to your portfolio.
No matter which route you take, make sure it aligns with your investment goals, time horizon, and risk tolerance.
After all, gold is more than just a metal—it’s a valuable asset that can help diversify your portfolio and protect your wealth.
So, take your pick, and let your gold investment journey shine in 2025 with the Best SIP Platform.
Suggested Read – Can SIP and SWP can be done Together?
