If you plan to invest in digital gold this Diwali, remember that you have several options, including gold mutual funds, gold ETFs and gold bonds. With the government planning to discontinue gold bonds, investors can consider investing in gold ETFs and gold mutual funds.
There are 17 gold exchange-traded funds (ETFs) with total assets under management (AUM) amounting to ₹39,823 crore, of which ₹1,233 crore worth inflow was added in September alone.
This is quite a humble figure compared to other schemes. For example, there are 243 schemes under the ‘index funds’ category with total AUMs of ₹2.69 lakh crore. Wealth advisors believe that the lack of popularity of gold ETFs can be partly attributed to the fact that they require investors to possess a demat account. No such restriction exists for investing in other mutual funds.
As of October 29, 2024, 24 karat gold is priced at ₹7,996 per gram and 22 karat gold at ₹7,331 per gram. Check this for more details.
Gold ETFs | 1-year-returns(%) |
| Aditya Birla Sun Life Gold ETF | 27.03 |
| Axis Gold ETF | 26.31 |
| DSP Gold ETF | 26.90 |
| HDFC Gold ETF | 25.53 |
| ICICI Prudential Gold ETF | 27.14 |
| Invesco India Gold ETF | 26.27 |
| Kotak Gold ETF | 27.08 |
| LIC MF Gold ETF | 26.58 |
| Mirae Asset Gold ETF | 27.07 |
(Source: AMFI; Regular returns as of Oct 28, 2024)
As we can see in the table above, almost all the gold ETFs have delivered nearly similar returns, i.e., 27 per cent in the past year. Gold prices have risen around 28 per cent since last Diwali. The same level of returns can be seen in these exchange-traded funds (ETFs).
For instance, Aditya Birla Sun Life Gold ETF returned 27.03 per cent in the past year, Axis Gold ETF returned 26.31 per cent, and DSP Gold ETF delivered a return of 26.90 per cent. Other schemes also returned similar amounts during this period.
“It is better to buy gold ETFs since you don't have to pay the making charges (around 10 per cent) and GST (3 per cent). Another advantage of buying digital gold is that you can buy even for ₹1,000, an option not available in the case of hard jewellery,” says Sridharan S., a Sebi-registered investment advisor and founder of Wealth Ladder Direct.
Digital gold buying offers several advantages, argues Bipin Preet Singh, Co-founder and CEO of MobiKwik. “First, it provides unmatched convenience and accessibility. It also inculcates the habit of disciplined investing, allowing users to start with as low as ₹10. Additionally, digital gold is stored securely with trusted partners to ensure the highest standards of safety and security,” says Singh.
It is worth mentioning that investors can ride the gold wave by investing in digital gold without having to incur any making charges or GST. As a result, the potential to earn higher gains is stunted in the case of physical gold vis-a-vis digital gold.
