Perccent

Gold has sat in Indian cupboards for generations—not just as jewellery, but as safety during uncertain times. Today, you don’t need lockers or making charges to benefit from gold.

A gold mutual fund (usually a fund-of-funds that invests in a gold ETF) lets you track the metal’s price, without a Demat account or physical storage. In short, you get the gold exposure you want through a familiar mutual fund route.

AMFI/SEBI norms require the underlying physical gold to be 99.5% purity or higher, helping standardise quality across the ecosystem.

And here’s the real advantage: doing it via a gold SIP plan. Instead of guessing the “right time”, SIPs spread your buys across months. You buy a bit more when prices cool, a bit less when they jump—reducing timing stress.

This habit mattered through 2020–2025, a stretch that reminded investors how gold can support portfolios when markets shake and global headlines turn rough.

Why this topic matters

Mutual funds in India have grown fast through 2024–2025, with record AUMs and rising adoption of passive strategies like ETFs and index funds—gold exposure has ridden the same wave.

As of August 2025, the industry crossed about ₹75.19 lakh crore in AUM, with passive AUM above ₹12 lakh crore—evidence that simple, rules-based exposure is going mainstream. For many investors, that makes a gold mutual fund investment feel more accessible than ever.

At the same time, investors want convenience and clarity. They want the best gold mutual fund options made simple and a way to start small. That’s where a mutual fund gold route with SIP—no Demat, digital onboarding, and clean tracking—fits neatly.

Gold, made simple: what you’re buying

A gold fund (FoF) collects your money and buys units of a gold ETF. That ETF, in turn, holds physical gold (standard 99.5% purity bars). Your NAV mirrors domestic gold price movements (plus currency and costs). You transact like any other mutual fund—lumpsum or SIP in gold—and you can redeem online on business days. No lockers, no purity doubts, and no hassles or hidden cuts when you sell.

Crucially, a gold FoF doesn’t need a Demat account (unlike buying the ETF directly). That’s why many first-timers prefer the FoF route for their gold mutual fund in India journey: it’s the same app-based experience they already use for equity or debt funds.

How a Gold SIP fund works

Think of a gold SIP plan as a simple standing order: a fixed amount gets invested in your chosen mutual fund for gold on the same date every month.

Below are the core features—explained.

1) Structure: FoF → ETF → physical gold

A gold FoF buys a gold ETF, and the ETF holds physical gold meeting 99.5% purity standards. This keeps your exposure tightly linked to the metal, without you handling the logistics. The fund publishes a daily NAV, portfolio mix (largely gold), and a factsheet so you always know what you own.

What this means:
The ETF typically maintains ~98–100% in gold; small cash is held for liquidity and expenses. For example, SBI Gold ETF shows ~98%+ in gold in recent factsheets, signalling tight tracking to the domestic gold price. In practice, your FoF’s returns will be the ETF’s returns minus FoF costs.

2) No Demat, easy setup
You invest and redeem like any other mutual fund—ideal if you don’t trade on exchanges.

What this means:
While mutual fund gold fund exposure via ETF needs a Demat/trading account, a FoF does not. If you’re already KYC-verified, setting up a SIP mandate is a few clicks. Many apps let you start at ₹100–₹500, making SIP on gold a low-friction habit.

3) SIP discipline and rupee-cost averaging
A SIP buys fewer units at higher prices and more units at lower prices.

What this means:
This naturally averages your cost and reduces timing anxiety—especially useful because gold can be headline-sensitive. Over multi-year cycles, this steadiness often matters more than hunting the best mutual fund gold return of the last quarter.

4) Liquidity and transparency
You can redeem on business days at published NAVs; no making charges or locker fees.

What this means:
AMCs disclose holdings and expense ratios on scheme pages/factsheets. You see your NAV daily, track performance in the same portfolio as your equity/debt funds, and rebalance when allocations drift after a rally.

A few limitations

1) Use gold as a diversifier, not the whole plan
Gold doesn’t generate cash flows like businesses or bonds. It helps cushion portfolios during equity drawdowns. Treat it as part of asset allocation, not your only growth engine.

2) Costs exist at two layers
A gold FoF has an expense ratio, and the underlying ETF has one too. These are regulated and disclosed, but they still exist. Focus on total suitability—access, simplicity, tracking quality—rather than a single number in isolation.

3) Cycles can test patience
Gold can stay still for stretches. SIP helps, but you still need a reasonable horizon and a calm review rhythm (quarterly or semi-annual, not daily).

Why a Gold SIP plan can be worth it

1) Timing relief through rupee-cost averaging

If you’ve ever delayed investing because “prices look high,” a SIP sidesteps the debate. It buys consistently, giving you a fair average over time. For commodity-like assets that move on global cues, this can be the difference between starting now and never starting.

2) Clean access—no purity or storage worries

With a gold mutual fund India route, you avoid making charges, locker fees, or buy-back spreads on jewellery. The ETF holds standard 99.5% gold; the AMC and custodian manage storage as per norms. Your role is just to fund the SIP and review periodically.

3) Portfolio balance when markets shake

Historically, gold often helps when equities are under pressure. A small, steady allocation via a gold SIP plan can lower overall volatility in a real-life portfolio—the kind you rely on to fund goals over years, not days. The growth of passive AUM in 2025 shows investors are embracing such simple, role-based building blocks.

4) One-portfolio view

Holding your gold mutual fund investment next to equity/debt in the same app keeps reviews simple: top-up, step-up, or rebalance without moving between lockers, jewellers, or exchanges.

How to start a Gold SIP

Before we list the top 5 gold mutual funds in India, here’s the simple process many investors follow.

This is intentionally practical, so you can act on it the same day.

Step 1: Pick your platform

Use a guided distributor or your preferred app/AMC. If you already maintain goals (education, first scooter, down payment), add mutual fund gold exposure to the relevant basket so it stays purposeful.

Step 2: Ensure KYC/CKYC

Typically required: PAN, Aadhaar, a mobile number (OTP), and bank details (cancelled cheque or bank statement). If KYC is already done, you can proceed straight to mandate setup.

Step 3: Create the SIP

Choose the gold fund (FoF), decide the amount and date, and register an e-mandate. Start small and step up annually. Align the debit date to your salary credit for smoother cash flow.

Step 4: Review without over-checking

Quarterly/semi-annual reviews are enough. If gold rallies and your gold weight goes beyond your target, consider trimming; if it’s below, consider topping up. This keeps your plan steady without second-guessing every headline.

Top 5 gold mutual funds in India (mid-2025)

Below are five widely tracked top gold mutual funds (FoFs that invest in gold ETFs).
These are examples to research further—not advice.

Check the latest factsheet for AUM/expenses/exits before you invest.

1) SBI Gold Fund (FoF)
What it is: An open-ended FoF that invests in the SBI Gold ETF.
Why it’s popular: Broad availability, simple SIP setup, and a long track record make it easy to start.

What stands out: Recent factsheets indicate a near-full allocation to the ETF and transparent reporting (AUM/AaUM published monthly). Good for investors who already use SBI’s ecosystem.

2) Nippon India Gold Savings Fund (FoF)

What it is: A FoF channeling money primarily into Nippon India ETF Gold BeES, among the oldest and most liquid gold ETFs in India.
Why it’s popular: Wide distribution and low SIP minimums; scheme and product notes are updated frequently.

What stands out: The combination of a large underlying ETF and FoF convenience (no Demat) keeps the experience straightforward for first-time mutual fund gold investors.

3) HDFC Gold ETF Fund of Funds

What it is: A FoF investing in HDFC Gold ETF.
Why it’s popular: Familiar brand, clean SIP experience, and detailed scheme documents (SID/AR) for transparency.

What stands out: The fund tracks domestic gold via the ETF; documentation explains tracking nuances (expenses/premium-discount). Handy if you already manage other HDFC schemes under one login.

4) Kotak Gold Fund (FoF)

What it is: Kotak’s FoF route to hold gold via its ETF.
Why it’s popular: Consolidation benefits if you already own Kotak funds; easy SIP with low starting amounts.

What stands out: Regular fact sheets/portals list assets and portfolio mix; third-party trackers show sizeable assets and consistent ETF-based exposure. Verify the latest factsheet for current numbers before investing.

5) ICICI Prudential Regular Gold Savings Fund (FoF)

What it is: A FoF investing in ICICI Prudential Gold ETF.
Why it’s popular: Strong distribution and easy SIP setup; detailed single-pager and scheme page outline, objectives, and riskometer.

What stands out: Morningstar and the AMC page show substantial assets and a clear ETF-backed structure; check the latest factsheet for current holdings and expense ratio.

Tip: If you’re comparing options, look at access (SIP minimums), underlying ETF scale, and how neatly it fits your platform/portfolio. Research sites and factsheets disclose the core details you need.

Gold fund vs gold ETF vs physical gold (when evaluating the “best gold mutual fund in India” for you)

• Gold FoF (mutual fund) → No Demat, SIP-friendly, tracked via NAVs, easy to hold next to equity/debt funds.
  
• Gold ETF → Requires Demat/trading; intraday liquidity; usually slightly lower net costs but more DIY effort.
  
• Physical gold/jewellery → Making charges, locker/storage, purity checks, and buy-back spreads. AMFI norms standardise ETF purity at 99.5%, which funds follow via their underlying.

Conclusion

If you want gold in your plan without the fuss, a gold SIP plan through a gold mutual fund is a tidy, low-effort path. It’s not a replacement for equity or debt, but a steady diversifier that you can set up once and review on schedule. The Indian MF ecosystem is mature, disclosures are robust, and getting started takes minutes.

Start with Perccent is a goal- and basket-based platform built for simple, consistent investing. Create a goal (education, first laptop, emergency buffer).

FAQs

1) Is a gold SIP plan better than a LumpSum?

They solve different problems. SIPs reduce timing stress and average your cost; LumpSums make sense if you already hold surplus cash and a long horizon. Many investors blend both: start with a small lumpsum to “seed” the position, then keep a monthly SIP running.

2) What’s the ideal allocation to gold?

There’s no single number. Many asset-allocation frameworks keep gold in the single digits to low teens (% of portfolio) as a diversifier alongside equity and debt. Your risk profile, goal timeline, and comfort with volatility should drive the final number.

3) Are gold mutual funds the same as Sovereign Gold Bonds (SGBs)?

No. SGBs are government securities linked to the gold price and pay a small interest; they have holding/exit rules. Gold FoFs/ETFs track the metal without fixed interest and are more flexible for SIPs and rebalancing. Choose based on liquidity and holding horizon.

4) Will the “best gold mutual fund” change every year?

Performance league tables can shuffle. Instead of chasing last year’s winner, evaluate access, costs, underlying ETF scale/liquidity, and how smoothly it fits your platform and review routine. A good process outlives a hot list.

5) Do I need a Demat account for a mutual fund gold fund?

No. That’s the point of a FoF: it lets you invest in gold via the mutual fund route without Demat. If you prefer ETFs and already have Demat, that’s fine too—just pick what you’ll actually use consistently.

6) How are expenses handled?

Both the FoF and the ETF have expense ratios, disclosed in fact sheets. They’re regulated and transparent; your decision should balance total cost with convenience, fit, and your own investing behaviour.

Disclaimer:
Mutual fund investments are subject to market risks. Please read all scheme-related documents carefully before investing. The examples and scenarios shared in this article are for educational purposes only and are intended to help parents and individuals make informed decisions. They do not constitute financial advice or a recommendation. For personalised investment planning — especially when investing for your child’s future — please consult a certified financial advisor or distributor.