Over five years, the category has compounded at roughly 24.5% a year, which means Rs 100,000 put into gold in August 2021 is worth almost Rs 300,000 today.
That kind of run does two things. It pulls in money, and it pulls in questions. The most common one is… which gold ETF to buy?
It’s a fair question with an unusual answer, because every one of the 26 gold ETFs listed in India holds the same metal – physical gold of 995 fineness, sitting in a vault, valued off the same domestic price.
There is no fund manager picking winners here, no stock selection, no style. The differences between these funds come down to what each one charges, how much cash it carries, and how efficiently it can be bought and sold on the exchange.
So, let’s look at the top 5 gold ETFs in India.
We have ranked and selected them basis their five-year CAGR. Of the 26 gold ETFs in the category, only 11 have a five-year track record and other 15 are launches from the past three years.
Among the 11 that qualified, the six that missed the cut were Axis, Kotak, Quantum, HDFC, SBI, and Nippon India Gold BeES.
You’ll be shocked to see Nippon being excluded as it’s the oldest, largest and by far the most traded gold ETF in India. But it doesn’t make the cut in the top 5.
| Scheme | NAV (Rs) | 1 Year | 2 Years | 3 Years | 5 Years |
|---|---|---|---|---|---|
| LIC MF Gold ETF | 133.9 | 47.3 | 46.5 | 35.0 | 24.9 |
| UTI Gold ETF | 125.0 | 47.6 | 46.7 | 35.1 | 24.7 |
| Invesco India Gold ETF | 129.2 | 47.1 | 45.7 | 34.7 | 24.6 |
| ICICI Pru Gold ETF | 127.2 | 47.4 | 45.9 | 34.8 | 24.6 |
| Aditya Birla SL Gold ETF | 130.7 | 47.5 | 45.9 | 34.7 | 24.5 |
| Category average | – | 47.1 | 45.8 | 34.7 | 24.5 |
| Category median | – | 47.1 | 45.7 | 34.7 | 24.5 |
Data Source: Ace MF
#1 LIC MF Gold ETF
First on the list is LIC MF Gold ETF.
LIC MF Gold ETF tops the five-year table at 24.90%, and it’s the only fund in the category above 24.75%. Over five years, that’s a clear enough win.
The picture is less commanding elsewhere. Over one year it ranks fourth of these five, and on tracking error it sits eighth of 26.
It’s among the smaller gold ETFs by assets, which matters, because a thinner order book on the exchange means a wider gap between the price you see and the price you get.
For a lump-sum buyer placing a limit order that is manageable. But for anyone trading in size, it is a cost that never appears in a returns table.
#2 UTI Gold ETF
Second is UTI Gold ETF, the most interesting name on this list.
Most interesting because it leads on every period except the one being screened. It is first over one year at 47.56%, first over two years at 46.69% and first over three years at 35.07%.
On five years it comes second by 25 basis points.
That pattern usually means recent execution has improved, and the five-year number is still carrying an older, weaker stretch.
It’s also the fund with the highest tracking error of the five, ranking eleventh of 26, which cuts the other way.
UTI has run a gold ETF since 2007, so this is not a fund finding its feet.
If your screen were three-year CAGR rather than five, this would be the fund at the top of the page.
#3 Invesco India Gold ETF
Third is the quietest ETF. Invesco Gold ETF ranks third over five years at 24.58%, and last of the five over both one year and two years.
What redeems it is the tracking error, where it ranks fifth among the 26.
A fund that tracks tightly but ranks low on recent returns tells you something about cost since tight tracking and a modest return gap together point to fees.
It’s also one of the smaller funds in the category by assets.
Invesco is a serious passive manager globally, but in this specific product the case rests on efficiency and not scale.
#4 ICICI Pru Gold ETF
If you wanted one word for ICICI Pru Gold ETF, it would be consistency.
Third of the five over one year, third over two, third over three, fourth over five. Basically, it never wins and it never lags.
On tracking error, this ETF does better than that, ranking third.
It’s also one of the larger gold ETFs by assets. This point about scale deserves some weight. A larger fund generally means tighter spreads on the exchange, better market-maker support, and less risk of the traded price drifting away from the underlying value on a volatile day.
Those are not glamorous advantages, but they do matter in some way.
#5 Aditya Birla Sun Life Gold ETF
Last is Aditya Birla Sun Life Gold ETF with a 24.53% CAGR over 5 years. This is in line with the category average.
On tracking error, it is first among 26, at 5.04.
Those two facts sit awkwardly together, and the resolution is probably that this fund replicates gold about as precisely as anything in India but gives a little more of the return back in fees.
It also ranks second of the five ETFs mentioned here over one year, at 47.53%, which suggests the recent gap has narrowed.
Of the five ETFs here, this is the one whose five-year ranking most understates it.
Where Gold ETFs Actually Differ
Tracking error measures how consistently a fund shadows its benchmark. A fund can lag gold by a predictable amount every year and still show low tracking error.
That is why the ranking below does not line up with the returns table, and why both are worth reading together.
| Scheme | Tracking error | Rank (of 26) | Expense ratio (%) | AUM (Rs crore) |
|---|---|---|---|---|
| Aditya Birla SL Gold ETF | 5.0 | 1 | 0.4 | 2,705 |
| ICICI Pru Gold ETF | 5.1 | 3 | 0.5 | 25,822 |
| Invesco India Gold ETF | 5.1 | 5 | 0.5 | 723 |
| LIC MF Gold ETF | 5.2 | 8 | 0.5 | 1,370 |
| UTI Gold ETF | 5.2 | 11 | 0.6 | 4,091 |
Data Source: Ace MF, tracking error for the period 9 August 2023 to 9 August 2026
What the Gold ETF Returns Don’t Tell You
Three things matter for a gold ETF that no performance table will show you.
The first is the expense ratio, which is the single largest explanation for why eleven funds holding identical gold produced eleven different numbers.
Check it on the AMC factsheet before buying, because the aggregator sites disagree with each other.
The second is liquidity. A gold ETF is bought on the exchange, not from the AMC, so the price you pay is whatever the order book offers. On a thinly traded fund the bid-ask spread and the premium or discount to NAV can cost more in a single transaction.
Always use limit orders and avoid the first and last fifteen minutes of the session.
The third is that NAV per unit means nothing across funds. In the same category, Tata Gold ETF has a NAV of Rs 14.43 and Edelweiss Gold ETF Rs 148.43. That is a difference in unit size, not in value, and a Rs 14 gold ETF is not cheaper than a Rs 148 ETF.
Tax Position of Gold ETFs has Improved
Gold ETFs are now taxed more favourably than the metal itself, which was not true two years ago.
Listed gold ETF units held for more than 12 months attract long-term capital gains at a flat 12.5% without indexation. Sold within 12 months, gains are added to income and taxed at slab rate.
Physical gold, by contrast, needs a 24-month holding period before it qualifies for the same 12.5% long-term rate. There is no securities transaction tax on gold ETFs, and no GST, against the 3% GST on buying physical gold.
One detail worth noting: the Rs 1.25 lakh annual exemption that applies to equity long-term gains does not extend to gold ETFs. The 12.5% tax applies from the first rupee of gain.
Conclusion
Gold at these levels invites a question nobody asked at the start of the run, which is whether the entry price still makes sense.
Consider investing in gold only if you are comfortable with the price.
Also, consider the costs and how easily these ETFs trade. These two points should be factored in when making a financial decision.
Always evaluate the scheme’s costs, tracking record, liquidity on the exchange, and your own asset allocation before drawing any investment conclusions.
Happy investing.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here…
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