Physical gold is considered a good investment option among the traditional middle class investors who tend to choose it over other asset classes such as stocks. However, it entails some charges and storage cost, among others. Conversely, if you invest in the digital gold, you can ride its growth without having to spend anything on the processing and other charges. On a year-on-year-basis, gold has given 25 percent return.
As we are aware that RBI has not issued gold sovereign bonds (SGBs) in a long time and it is just a matter of time before the gold bonds become history. Therefore, the best way to get exposure to investing in gold is through gold ETFs (exchange traded funds).
What are gold ETFs?
Gold ETFs are ETFs with gold as the underlying asset. The scheme issues units against gold held. Each unit represents a defined weight in gold, typically one gram. The scheme holds gold in form of physical gold or gold related instruments approved by SEBI.
These schemes can invest up to 20 percent of net assets in gold deposit scheme of banks. The price of ETF units moves in line with the price of gold on metal exchange. There are a total of 20 schemes with net assets under management of ₹58,887 crore as on March 31, 2025.
(Source: AMFI; 3-year returns as on April 29)
As we can see in the table above, most gold ETFs have given similar returns i.e., 21 to 22 percent per annum.
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