Gold Mutual Funds

A gold fund owns gold, either as physical metal or as units of a fund that holds the metal. A mutual fund is a pool of money from many people, invested by a professional manager under SEBI rules. SEBI has no commodity category. It writes separate rules for two kinds of scheme that can hold gold.

• Gold ETF. An ETF, or exchange-traded fund, is a fund whose units are listed and traded on a stock exchange. A gold ETF must keep at least 95% of its net assets in gold and gold-related instruments. Those instruments are bank gold deposits, the government's Gold Monetisation Scheme and exchange-traded gold futures (contracts whose value comes from the gold price). Together they may make up at most half the fund.
• Gold fund of funds (FoF). A fund of funds invests in other funds. A gold FoF must keep at least 95% in its underlying fund, which is a gold ETF.

Put simply, a gold ETF owns the gold. A gold fund of funds owns units of gold ETFs, so it holds gold one step removed.

The physical gold has to be in standard bars of 99.5% purity. A custodian, a SEBI-registered firm appointed by the trustees to keep the fund's assets safe, holds the bars. The trustees are a separate company that holds the fund's money and investments on your behalf. The fund's auditors check the metal physically every six months and report to them.

A fund house normally gets one scheme per SEBI category. Funds of funds are an exception when each holds a different underlying fund. A FoF that holds both gold and silver ETFs counts as a commodity-based FoF. SEBI allows only one of those per fund house. It must be passive, following a set benchmark rather than a manager's picks.

None of these funds has a lock-in, a period during which you cannot sell at all.

Two things change: how you buy and sell, and when a gain turns long-term for tax.

Buying a gold ETF. You buy and sell ETF units on the stock exchange during market hours, like a share. Each ETF has at least two market makers, firms that keep quoting prices at which they will buy and sell. One gold ETF's scheme document says you need a demat account, which holds units in electronic form. Dealing with the fund house directly is allowed only above ₹25 crore.

Buying a gold fund of funds. FoF units are not listed. You buy them from the fund and redeem them, meaning you sell them back to it.

This list shows funds of funds, which you can buy like any other mutual fund. Gold ETFs themselves trade on the stock exchange and are not listed here.

The tax clock. A listed ETF unit's gain turns long-term after 12 months. An unlisted FoF unit needs more than 24 months. Between 12 and 24 months, the same gain is long-term on an ETF unit but short-term on a FoF unit. The tax section below shows what that costs in rupees.

Closely, but never exactly. SEBI's stated aim for a gold ETF is returns in line with the domestic price of physical gold, allowing for tracking error.

Tracking error measures how far a fund's daily returns wander from the price it follows, over the past year. SEBI caps a gold ETF's tracking error at 2% a year, barring events outside the fund house's control. The ETF publishes its tracking error every day, on its fund house's website and on AMFI's. The fund of funds explains the risk in its scheme document.

Since 1 April 2026, funds value their physical gold at spot prices polled and published by recognised stock exchanges.

A gold fund of funds adds one more step. It values its ETF units at their closing price on the stock exchange. So its NAV, the price of one unit, can differ slightly from the gold price.

Most listed gold funds read High on 29 September 2026; the rest read Very High. The riskometer is the risk label SEBI makes every fund show, on six levels from Low to Very High, checked every month.

For gold, the label follows a price measure. SEBI scores gold and silver by how much their prices have swung over the last 15 years. The score is updated every quarter. Silver swings more, so silver funds show Very High and gold funds High. HDFC's and Tata's gold ETFs both read High at the end of August 2026.

A gold fund of funds takes its score from the riskometer of the ETF it holds.

The list is not all pure gold. Some funds here hold both gold and silver ETFs, so they move partly with silver. One holds shares of metal companies, not gold, and behaves like an equity fund.

The level can change as the 15-year score moves. If it does, the fund house must tell you by email or SMS.

High is not a small risk. Prices can fall for years: going by RBI's yearly averages, gold in 2015-16 was 12% below its 2012-13 level, and silver 37% below.

Once held past 12 months (a listed ETF unit) or 24 months (a FoF unit), a gold fund's gain is long-term and taxed at 12.5%. It falls under the general capital gains rules of the Income-tax Act, 2025. A gold fund is not an equity-oriented fund, which needs at least 65% in Indian listed shares on the year's average (section 198(8)). Nor is it a Specified Mutual Fund, which needs more than 65% in debt and money market instruments (section 76). A gold fund holds neither. The metal-shares fund in this list is different: its tax depends on its holdings, so check its scheme document.

For units you sell in the tax year 2026-27, the purchase date does not matter. Before or after 1 April 2023, the same rules apply.

The rate depends on your holding period, the time from buying a unit to selling it:

• Long-term capital gain: profit on a listed ETF unit held more than 12 months, or an unlisted FoF unit held more than 24 months. It is taxed at 12.5% of the whole gain without indexation, so your cost is not raised for inflation (section 197).
• Short-term capital gain: profit on an ETF unit held 12 months or less, or a FoF unit held 24 months or less. It is added to your income and taxed at your slab rate, the rate for your income band.

The ₹1,25,000 yearly exemption is for equity-oriented funds only. It does not apply here.

A worked example, on an assumed gain. It assumes no surcharge, the extra charge on tax once total income passes ₹50 lakh. Cess is an extra 4% charge on the tax. Suppose you sell units 18 months after buying them, for a gain of ₹3,68,000.

• Gold ETF units are long-term. Tax is 12.5%, or ₹46,000, plus ₹1,840 cess: ₹47,840.
• Gold FoF units are short-term. If the whole gain falls in a 20% slab, tax is ₹73,600 plus ₹2,944 cess: ₹76,544. In a 30% slab it is ₹1,10,400 plus ₹4,416 cess: ₹1,14,816.

Had you held the FoF units past 24 months, the gain would be long-term and cost ₹47,840, the same as the ETF.

IDCW means payouts a fund makes from its income or gains, which cut its NAV by the amount paid. Your slab rate applies to them. Once your IDCW from a fund house crosses ₹10,000 in a tax year, it deducts 10% TDS on the whole amount. That deduction, called TDS (tax deducted at source), is credited against your tax for the year. A resident's redemption gains carry no TDS.

Koshex suggests 5 years or more for a gold fund. SEBI sets no horizon; this is our view for a fund that follows one metal's price.

Take a family saving for gold jewellery for a wedding about eight years away. Eight years clears our suggested five. It also clears the 24 months after which a FoF unit's gain turns long-term. Even so, the price in the wedding year could be lower than in the year before.

A gold fund is one way to hold gold. A multi asset allocation fund is another. It must keep at least 10% in each of three or more asset classes, such as equity, debt and gold. There, gold can be one part of a mixed fund rather than the whole of it.

How much gold fits depends on three things:

• how many years you have before you need the money;
• what else you already hold;
• how large a fall you could sit through without selling.

Koshex helps you choose a fund that suits your goal and timeline. When prices fall sharply, we talk you through it before you redeem.

Compare four things for each fund: its past yearly growth (CAGR), riskometer level, expense ratio and exit load. There are 26 listed gold funds, and together they manage ₹73,661 Cr. AUM, assets under management, is what that money is worth today, not what people paid in. 13 of them have run for 3 years or more; only these are ranked on 3-year return and counted in the averages.

• CAGR: the average yearly growth over a period, as if the fund had grown at one steady pace.
• Riskometer: the level is not the same for every fund in this list, so read the one shown against each fund today.
• Expense ratio: the fund's yearly fee, shown as a percentage of your money and taken out of the fund's value. Each fund's factsheet shows it. SEBI caps the total cost of a gold fund of funds, including the ETF it holds, at 0.90% a year.
• Exit load: a fee some funds charge if you sell within a set time after buying. SEBI does not set an exit load for this category. Many funds charge a small one if you leave early, from a week to a year; check the scheme document.

When you redeem, the money reaches your bank within three working days.

SIP or lumpsum. A SIP puts a fixed amount in at regular intervals, usually monthly. A lumpsum is one larger amount on a single date. In a gold FoF, every SIP instalment starts its own 24-month clock before its gain is long-term.

Koshex holds AMFI registration ARN-154632 as a distributor, a registered intermediary that helps you buy and manage funds. Through us you get the regular plan, the version bought through a distributor. We review your holdings over time and flag changes in a fund's category, risk or ranking.