The Best Gold ETFs for Long-Term Investment in 2025
Gold has always been a preferred asset for long-term investment, known for its ability to hedge against inflation and provide stability during market volatility. In 2025, Gold Exchange-Traded Funds (ETFs) continue to emerge as a smart, efficient, and cost-effective way to invest in gold without the hassle of owning physical gold.
This blog explores the best gold ETFs for long-term investment in 2025, their advantages, and how to choose the right one for your portfolio.
What are Gold ETFs
Backed by Physical Gold: Each unit of a gold ETF represents a specific quantity of gold, usually 1 gram.
Traded Like Stocks: Investors can buy and sell gold ETFs during market hours at live market prices.
Cost-Efficient: Avoid storage costs, making them cheaper than owning physical gold.
Transparent Pricing: Gold ETFs track gold prices in real-time, providing transparency.
Top Gold ETFs for Investment in India
1. Nippon India ETF Gold BeES
Expense Ratio: 0.82%
Why It’s Good: Low expense ratio, high liquidity, and minimal tracking error make this a cost-effective option for long-term investors.
2. SBI Gold ETF
Expense Ratio: 0.65%
Why It’s Good: Offers a strong track record with reliable backing from SBI Mutual Fund. It’s a low-cost and stable choice.
3. HDFC Gold ETF
Expense Ratio: 0.83%
Why It’s Good: Managed by a reputable fund house, it’s a trusted option for conservative investors.
4. ICICI Prudential Gold ETF
Expense Ratio: ~0.50%
Why It’s Good: This ETF combines low costs with strong tracking accuracy, ideal for maximizing returns.
5. Kotak Gold ETF
Expense Ratio: 0.56%
Why It’s Good: Known for its high efficiency and liquidity, it’s a reliable choice for both beginners and seasoned investors.
How to Choose the Best Gold ETF
When selecting a gold ETF, consider these factors:
1. Expense Ratio: Lower ratios mean higher net returns.
2. Tracking Error: Look for ETFs with minimal deviation from gold price movements.
3. Liquidity: Choose ETFs with high trading volumes for ease of buying and selling.
4. Fund Reputation: Prefer ETFs managed by established fund houses with a good performance history.
Risks to Consider Before Investing
While gold ETFs are generally low-risk, investors should be aware of the following:
1. Market Volatility: Gold prices can fluctuate based on global economic conditions.
2. Currency Risk: In India, gold prices are influenced by the USD-INR exchange rate.
3. Tracking Error: Some ETFs may not perfectly match gold prices due to expenses or operational inefficiencies.
4. Sector-Specific Risks: Certain REITs, like retail or hospitality, are vulnerable to industry-specific trends or economic downturns.
5. Tax Implications: Dividends from REITs are often taxed as ordinary income, which may lead to higher tax liabilities for investors.
Benefits of Investing in Gold ETFs
1. Safety and Security
Gold ETFs eliminate the risk of theft or damage associated with physical gold, as the gold is stored in secure vaults.
2. Transparency
With real-time tracking and regular updates, gold ETFs offer complete transparency about your investment.
3. Oversupply Issues
In some regions or sectors, oversupply of properties can lead to lower occupancy rates and diminished income streams.
4. Professional Management
Professionals manage REITs, eliminating the hassle of property management for investors.
5. Accessibility
With REITs, even small investors can gain exposure to high-value real estate assets without needing significant capital.
6. Inflation Hedge
Real estate values and rental incomes often rise with inflation, making REITs a potential hedge against inflation.
Types of REITs
REITs come in various forms, catering to different investor preferences and risk profiles. Here are the main types:
1. Equity REITs
Equity REITs invest directly in physical properties. They generate income primarily from rents collected from tenants. For example, a retail REIT might own and operate shopping malls.
2. Mortgage REITs (mREITs)
These REITs don’t own properties but instead invest in real estate debt, such as mortgages or mortgage-backed securities. Their income comes from the interest earned on these loans.
3. Hybrid REITs
Hybrid REITs combine the strategies of both equity and mortgage REITs, generating income from property rents as well as interest on real estate loans.
4. Publicly Traded REITs
Listed on stock exchanges, these REITs are easy to buy and sell, offering liquidity to investors.
5. Private REITs
Private REITs are not traded on stock exchanges and are typically available to accredited investors. They often have higher entry requirements and limited liquidity.
Who Should Invest in REITs?
REITs are suitable for:
Income-Seeking Investors: Those looking for steady dividend payouts.
Diversifiers: Investors aiming to balance their portfolios with real estate exposure.
Long-Term Investors: Individuals willing to hold REITs to benefit from consistent income and potential capital appreciation.
REITs are powerful tools for investing in real estate without the complexities of property ownership. They offer steady income, diversification, and accessibility to high-value properties, making them an attractive option for both novice and seasoned investors. However, like any investment, REITs come with risks, such as market volatility and sector-specific challenges. By understanding how REITs work and aligning them with your financial goals, you can make informed decisions to enhance your investment portfolio.
Gold ETFs are a smart, modern way to invest in gold, offering convenience, liquidity, and cost-efficiency. In 2025, options like Nippon India ETF Gold BeES, SBI Gold ETF, HDFC Gold ETF, Kotak Gold ETF, and ICICI Prudential Gold ETF stand out for their performance and reliability.
Before investing, evaluate factors like expense ratio, tracking error, and liquidity to choose the ETF that aligns with your financial goals. With careful planning, gold ETFs can serve as a robust asset in your long-term investment strategy.
Start your gold investment journey today and secure your financial future!