Gold ETF performance: A look at the performance of Gold ETFs in the last 5 years

There are multiple ways of investing in gold - gold mutual funds, sovereign gold bonds (SGBs), digital gold, etc. However, gold ETFs are one of the best investment options. Let us analyse the five-year returns on gold ETFs.

 investing in gold ETFs

Indians love their gold. Whatever the occasion - festival, marriage, anniversary, etc. - they love to flaunt their gold jewellery. This is precisely why India is the world’s second-largest gold importer and consumer.

Apart from consumption, there is a strong demand for gold as an investment product. The various ways of investing in gold include gold exchange-traded funds or ETFs, gold mutual funds, sovereign gold bonds (SGBs), digital gold, etc. In this article, we will focus on long-term investments in gold through gold ETFs.

What are gold ETFs?

A gold ETF is a financial product offered by Asset Management Companies (AMCs). Gold ETF schemes collect money from investors and invest it in physical gold on their behalf. These funds invest your money in 99.5% pure physical gold. Gold ETF units track the price of physical gold. A unit holder’s profit or loss depends on the difference between each unit’s selling price and purchase price.

Also Read: Gold ETFs Vs Physical Gold: Which One Is Better?

Now that we have understood the basics of gold ETFs, let us look at their returns in the last five years:

Five-year gold ETF performance

Five-year gold ETF performance

Source: https://www.valueresearchonline.com/funds/selector/category/144/commodities-gold/?end-type=1&exclude=suspended-plans&tab=returns-long-term

Note: The above returns are as of 5 September 2022. The returns for three and five years are CAGR. The funds have been ranked based on five-year returns.

The above table shows that gold has given good returns over a three and five year investment horizon. Hence, you should invest in gold ETFs with a long investment horizon for compounding returns.

IDBI Gold ETF has given the best returns of 10.18% CAGR in the last five years. However, the returns from other schemes are only slightly lower, in the range of 9.82% to 10.05% CAGR.

Also Read: Why Should Women Invest In ETFs?

Gold ETFs are one of the best ways of investing in gold

You can invest in gold ETFs very easily through your trading account. The minimum investment is 0.01 gram for most schemes, which is affordable to most people. You can sell the units anytime through BSE or NSE. Gold ETFs are one of the best ways of investing in gold for long-term financial goals, such as accumulating gold for your child’s wedding.

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