Which is the best gold ETF in India?

Update: I have done a more recent comparison on gold ETFs and that data can be found here. The methodology is the same which you can read there as well, but reading this post gives a good perspective on how this space has evolved.  Updated Article. 

This question keeps popping up in emails and comments from time to time, and I thought I’d address this with a post. Let me begin this post by saying that this is just my way of deciding which is the best gold ETF in India, and you are free to poke holes in this methodology, or even reject it outright, but if I were to invest in a gold ETF – this is the way I would go about it.

First off – I’d compare the expense ratios of all existing Indian gold ETFs, and see which are the ones with the lower expenses. I have already done that research earlier on this blog, and know that right now the Gold BeeS ETF from Benchmark Funds has the lowest expense ratio of 1%. Quantum Funds comes second with 1.25%. All the other funds charge higher expenses. The lower the expenses – the better it is because it leaves more on the table for investors.

Expenses alone are not enough for me because I want my investment to be liquid, and need the fund to have good volumes too. I went to the NSE website and gathered the volume data for all gold ETFs for the last month or so. I am presenting you yesterday’s volume data of all gold ETFs here. I am presenting just one day’s worth of data because that is pretty much representative of the overall volumes and is easier to read.

Gold ETF Volumes in India
Gold ETF Volumes in India

As you can see from the image – Gold BeeS, which has the lowest expenses also has the highest volume, and by a large margin too.

That does it for me – and if I had to invest in a Gold ETF – it would be this.

Keep in mind though that this is just my opinion and not expert advice tailored to your investing situation. Also bear in mind that I am not going to invest in this ETF because I am not looking at investing in gold right now, and even if I was – I would probably go for the more direct option of buying gold coins.

Update: I have done a more recent comparison on gold ETFs and that data can be found here. 

234 thoughts on “Which is the best gold ETF in India?”

  1. Hi manshu,

    I just read your Explanation on the best ETF and I should thank you for the detailed information and the analysis to justify your viewpoint

    howevere your article also states that you would take the direct option of buying gold coins if you had plans to invest in gold

    My question is: Would you suugest that buying gold coins is a better option than buying ETF, if my idea is to save in Gold for my Daughter?

    Kindly let me know

    venkat

    1. The final decision is up to you, but if the final objective of the gold is to make jewelery then I myself would prefer to buy gold from a reputed or known jeweler and then exchange it for jewelery when the time comes.

      1. Hi
        I do apreciate a father’s concern for his daughter’s wedding.
        However gold etf has certain benefits
        Even if you buy gold coins or bars, there would always be an extra premium for making them
        Banks do not buy back physical gold and jewellers most of the times only exchange, so in case your daughter asks for a house over gold, it can become difficult for you to get the right money for your gold
        No worries of theft in case of ETF and also save on locker charges
        In case of ETF, you can aslwys track your investments in real time
        We all know how jewellers fool us by reducing gold in wastage or impurties during the time of transformation to actual jewellery.

    2. Dear Venkat,

      Before you decide on Jewelleries or coins or ETF, suggest also have a look at E-Gold and E-Silver as an Long term investment. I am sure you will not regret it. Write to us at buyegoldesilver@gmail.com for more details.

  2. Hi,
    Your post is pretty good. I am looking into investing some money in electronic gold. In the comments section you have mentioned E-Gold and E-Silver. What is the difference between Gold ETF and E-Gold. If both are the same, what is the use of the ETF where one has to pay for managing the fund. Do you have any comments of E-Gold and E-Silver?
    Regards,
    Shankar

  3. Hi,

    THanks a lot for the valuable information. Can you please let me know as of TODAY (24th March) which is the best Gold ETF? Does the status of Nuumber 1 for GOLDBEES stand even for today?

    Regards,
    kiran S – 9986043327

    1. Manshu has done some serious analysis on Gold ETFs and i also agree that Benchmark AMC should be the best option for investing in GOLD ETF
      Reasons
      Lowest expense ratio
      Hishest Liquidity for buying and selling
      Pioneer in ETF in India
      Recently acquired by Goldman Sachs so can expect much more improvement in the Indian ETF space

  4. Thanks Manshu for the response..
    Since I have a baby girl, my main intension is to invest in Gold at regular intervals for her marriage. Having said that, I would be investing around 3-5k per month on a average in Gold ETF. I will also balance out it with physical gold purchase from time to time.
    What do you say ?
    So the best option would still be Benchmark Gold BEES?

    Regards
    Shiva

    1. In my personal view I don’t see much merit in anyone holding more than 5 – 10% of their total portfolio in gold. The retail interest and steep price hike in gold in the past decade or so has more or less rendered it as just another asset class. People have forgotten that for about 3 decades gold prices stagnated, and there is no reason why that can’t happen 5 years from now.

  5. Hey Manshu,

    You have not yet responded on the comment of HDFC Bank gaining sharply where other ETF fund decreased. Also a follow to that comment. If you can provide your expert opinion on that then I think I am ready to invest in Gold BEES (or HDFC ETF if your opinion changes 🙂 )

    Thanks
    Shiva

    1. Hey Shiv – sorry about that. Got busier than usual and couldn’t look into it. Your comment is timed well because NSE has released its monthly ETF report, and they report that GOLDBEES has returned 3.80% last month whereas HDFC has gone up by 3.77%. However for the last 3 months both have returned exactly the same viz. 0.35%.

      So, I think whatever you saw was an aberration and in the slightly longer term it got smoothened out.

      Having said that – I see you’re giving good thought on the instrument, but have you given good thought to gold as an instrument itself, and how it fits in your portfolio, and with your goals?

  6. what is the stock code for Gold BeeS ETF from Benchmark Funds? In ICICI Direct GOLDEX is there. are both the same?
    As per one of the comments here GOLDBEES is the code. But I was unable to find the same in ICICI Direct website.

  7. Hi Manshu,
    Very new to ETF’s gathered good info from this blog. You have compared expense ratios for some companies. What about Reliance gold ETF which ended yesterday. You thoughts and suggestions on this. I heard from a person from Kotak that they are going to launch GoldETF SIP very shortly.
    Please give us your suggestions.

    Many Thanks,
    Srihari

      1. I am new to Gold ETF. I want to buy Gold ETF units. Just now I’ve started demat account thru sharekhan. I am confused whether to buy Shares or gold etf.I don’t know abcd of both. Can you suggest the best? I want to invest for some 5 years .I should get a good return after that.
        Please reply me for the same

        1. Mercy
          Since you a novice, equity investing is definitely not for you. Invest in a good large cap mutual fund using SIP. As fas as investing in gold is concerned, never over-do. You may hold a maximum of 20% of your total investment in gold. Not more.

  8. Hi manshu,
    I tried to buy GOLDBEES from icici-direct. I tried for a search with GOLDBEES in icici-direct but could not find one. But I was able to find ‘BENCHMARK GOLD EXCH TRADED SCH’ using the stock code of GOLDEX.

    Just want to know whether GOLDEX is the same GOLDBEES etf. Does the stock code vary b/w different companies.(ie ICICI, Geojit etc..)?

  9. Hi manshu,
    I am interested to take gold ETF’s. I have a demat account in HDFC bank. On seeing of earlier discussions and threads got to know Goldbees is best one.But i didn’t Goldbees.
    can you plaese explain it?
    From which organisation can i start trading on Gold?
    Is there any service charge/VAT when buying gold ETF?
    please clarify my doubts…
    Thnks
    krishna

    1. GOLDBEES might have a different name or code on HDFC platform. Search for Benchmark Gold ETF and you will find the code. There is no VAT on buying ETFs. The charges remain the same as if you were buying shares.

  10. Hi Manshu,

    I have one query,

    I have brought Gold Bees ETF shares. I am not getting why there is a difference between Gold Bees and HDFC Gold Exchange Traded Fund. because I found that Gold ETF had 1937 and HDFC Gold Exchange Traded Fund has 1975. Why this much of difference

    1. HDFC gold ETF started out much later so that base might be different. There was another comment yesterday or day before talking about HDFC gold ETF rising sharply in a day, but I am a bit busy at the moment, and didn’t get an opportunity to look into it.

  11. Hello,

    I just want to know today when market closed HDFC GOLD ETF increased more then 50 points on NSE, where as Reliance Gold decreased by 2-3 points.

    Why so??? Gold rate is common for both the companies then why increase for one and decrease for one.

    Thank,
    Sanjay

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