September 17, 2025 - Updated on March 17, 2026
| Basis | Gold Fund | Sovereign Gold Bonds |
| What | The gold mutual fund invests in physical gold or gold-related securities, such as gold ETFs.
These funds are actively managed to follow gold price changes. Some of these schemes buy physical gold and keep it in the vaults. | SGBs are debt securities issued by the RBI on behalf of the Indian government.
They are directly tied to gold prices, providing a fixed 2.5% interest rate. However, SGB does not buy physical gold. The price is only pegged to gold. |
| Time Horizons | They provide flexible time horizons. Investors can even exit the very next day paying some nominal exit load. | SGBs have an 8-year term, but allowing early redemption after 5 years or exiting through the secondary market is another option. |
| Risk | They are low-risk instruments, less volatile than equity schemes. Offer consistent long-term returns. | SGBs are backed by the government, making them minimal-risk instruments. Only Price pegged to gold. |
| Returns | Gold price movements influence returns. | SGBs offer a fixed rate along with potential capital appreciation (appreciation in the gold price is the capital appreciation) |
| Taxation | Taxable based on the investor’s tax slab | SGBs are tax-exempt if held until maturity |
Gold Funds Returns
| Gold Funds | Returns (P.A) (as of 9 Feb 2024) (last 5yrs) |
| Invesco India Gold ETF FoF | 10.65% |
| Axis Gold Fund | 10.58% |
| SBI Gold Fund | 10.54% |
| ICICI Prudential Regular Gold Savings Fund (FOF) | 10.46% |
| HDFC Gold Fund | 10.41% |
Also Read: How to Find a Good Mutual Fund Distributor?
Sovereign Gold Bonds Returns
| Financial Year | Series | Issue Price (Rs) | Current Price (Rs) | Return of SGBs (%) |
| 2021-22 | XI | 6777 | 5926 | -12.6 |
| 2021-22 | XII | 6850 | 5926 | -13.5 |
| 2022-23 | I | 6927 | 5926 | -14.5 |
| 2022-23 | II | 7000 | 5926 | -15.3 |
| 2022-23 | III | 7077 | 5926 | -16.3 |
Like This Blog? Share With Others
About the Author
Mr Shashi Kant Bahl
Mr. Shashi Kant Bahl is a mutual fund professional with nearly 20 years of experience in the financial services industry. Since 2005, he has helped over 10,000 investors manage their mutual fund investments and build long-term wealth. His firm currently manages assets of over ₹734 crore (AUM).
Disclaimer: Mutual fund investments are subject to market risks. Read all scheme-related documents carefully.
