Commodity Mutual Funds

Commodity mutual funds hold gold or silver, or units of a fund that does. A mutual fund pools money from many people, and a professional manager invests it under SEBI rules. SEBI sorts funds into categories, its labels for what each fund may hold. None of them is called commodity. This page is Koshex's grouping of two kinds of fund.

The first is an exchange-traded fund (ETF), a fund whose units are listed and traded on a stock exchange. SEBI gives gold ETFs and silver ETFs their own set of rules. A gold ETF must keep at least 95% of its net assets in gold and gold-related instruments. A silver ETF follows the same 95% rule for silver. Each aims for returns in line with the domestic price of the physical metal.

The second is a fund of funds (FoF), a fund that buys units of another fund. A gold or silver FoF keeps at least 95% in its underlying ETF. SEBI files it under "Other: FoFs". A FoF holding both gold and silver ETFs is a separate type: passive only, one per fund house.

Funds named 'commodities' in the equity section buy shares of companies in commodity businesses; they do not hold gold or silver.

Gold funds hold gold and silver funds hold silver, and some funds hold both metals' ETFs.

Gold funds hold physical gold through a gold ETF, or hold units of gold ETFs. Most listed gold funds read High on the riskometer, SEBI's risk label, on 29 September 2026.

Silver funds do the same with silver. Every listed silver fund read Very High on that date. SEBI's rules for silver ETFs date from November 2021, so the oldest silver funds here started in January 2022. None has a five-year record yet.

The ETF or FoF choice also sets your tax clock. A listed ETF unit turns long-term after 12 months; an unlisted FoF unit after 24.

This list shows funds of funds, which you can buy like any other mutual fund. Gold and silver ETFs themselves trade on the stock exchange during market hours, like a share, and are not listed here. One ETF's scheme document says you need a demat account, which keeps securities in electronic form, to hold its units.

Inside an ETF, the metal sits in standard bars with a SEBI-registered custodian, a firm that keeps assets safe. Auditors check it physically every six months. Since 1 April 2026 it is valued at spot prices published by recognised stock exchanges; the silver page covers that change.

SEBI rates a gold or silver fund by how much the metal's price has swung. The riskometer is the six-level risk label, from Low to Very High, that every fund must show. It is checked every month.

For a fund that is almost all one metal, the riskometer comes down to one number: how widely that metal's price has swung over the past 15 years. It is updated every quarter. The bands are fixed by rule:

• yearly price swings (annualised volatility) under 10%: Moderate;
• 10% to 15%: Moderately High;
• 15% to 20%: High;
• above 20%: Very High.

Silver swings more, so silver funds show Very High and gold funds High. Two fund houses' factsheets for 31 August 2026 showed the same split for their gold and silver ETFs.

These levels can change. If a metal's 15-year swing crosses into another band, its funds move with it. The fund must then tell its unitholders by notice and by email or SMS.

Prices can fall for years: going by RBI's yearly averages, silver in 2015-16 was 37% below 2012-13, and gold 12% below.

Gold and silver funds are taxed under the general rules of the Income-tax Act, 2025, whenever you bought them. They hold no Indian shares, so they are not equity-oriented funds, which need at least 65% in Indian listed shares. They are not Specified Mutual Funds either, since those must hold more than 65% in debt (loans such as bonds).

Your holding period, how long you owned a unit, sets the rate. Sell a listed ETF unit within 12 months, or an unlisted FoF unit within 24, and the profit is a short-term capital gain. It is added to your income and taxed at your slab rate, the rate for your income band. After that line the gain is long-term, taxed at 12.5% without indexation (no inflation adjustment to your purchase price).

A worked example, assuming total income up to ₹50 lakh, so no surcharge applies. Suppose you sell units 30 months after buying them, past both lines, for an assumed gain of ₹4,35,000. Tax at 12.5% on the whole gain is ₹54,375. Add 4% cess, an extra charge on the tax, of ₹2,175. You pay ₹56,550.

Now picture the same long-term gain on an equity-oriented fund, with no other long-term equity gain that tax year. Only the ₹3,10,000 above the ₹1,25,000 exemption would be taxed, costing ₹40,300 with cess. Gold and silver funds get no such exemption, and here that costs ₹16,250 more.

IDCW, a payout from the fund that lowers its NAV (unit price), is added to your income at slab rate. Once your IDCW from a fund house crosses ₹10,000 in a tax year, it deducts 10% TDS (tax deducted at source) on the whole amount. A resident's redemption gains carry no TDS.

A commodity fund's value follows one metal's price, not any company's profits. Koshex suggests five years or more for both gold and silver funds.

You can also hold a metal inside a wider fund. SEBI lets mutual funds hold physical gold or silver only through gold or silver ETFs. A multi asset allocation fund can hold a metal that way, alongside shares and bonds.

How much of a metal fund fits is a personal call. It turns on your horizon, what else you already hold, and how large a fall you can sit through without selling.

Koshex is a distributor registered with AMFI (ARN-154632). We can help you choose a fund that suits your goal and timeline. After you invest, we keep reviewing your holdings and flag changes, such as a fund's riskometer level moving up a band.

Compare gold funds with gold funds, and silver with silver, since each follows a different metal. There are 39 listed commodity funds in the regular plan (the version bought through a distributor), growth option (which pays nothing out). Their combined AUM, the current value of the money they manage, is ₹99,704 Cr. 20 of them have a 3-year record and are ranked on 3-year return, their CAGR (average yearly growth) over that period.

Then check these:

• Riskometer: High or Very High, set by the metal.
• Expense ratio: the fund's yearly fee, as a share of your money, taken from its value. Each fund's factsheet shows it. SEBI caps the total cost of a gold or silver fund of funds, including the ETF it holds, at 0.90% a year.
• Tracking error: a yearly measure of how far an ETF's daily returns stray from the metal's. SEBI caps it at 2% for gold and silver ETFs.
• Exit load: a fee for selling within a set time. SEBI sets none for gold or silver funds, but many charge a small one if you leave early, from a week to a year. The scheme document gives each fund's terms.

There is no lock-in, a period when you cannot sell at all. When you do sell, the money must reach you within 3 working days.

A SIP (a fixed amount invested at regular intervals) or a lumpsum (one larger amount) both work. Each SIP instalment has its own holding period for tax.