Top Gold ETF vs Top Index Mutual Fund: Which has given higher return on Rs 10 lakh investment in 10 years
Top Gold ETF vs Top Index Mutual Fund: Gold ETFs and index funds are passive mutual funds. While a gold ETF can be traded in a share market, an index fund can't be. Both can provide stable returns in the long run. But which of the 2- top gold ETF or top index fund- has made investors richer on a Rs 10 lakh investment in 10 years? Know here-
Top Gold ETF vs Top Index Mutual Fund: Investors who don't want to invest directly in physical gold but want to take the benefit of its price appreciation can invest in a gold ETF. It's a passive mutual fund with a low expense ratio. Likewise, an index fund is also a passive fund where a fund manager follows an index. Investors who are starting their mutual fund journey, have little knowledge of funds, or don't have much time to track their investments often invest in an index fund. Know how gold ETFs and index funds are different from each other, and which of the 2- the top gold ETF or the top index mutual fund- has given a higher return on a Rs 10 lakh investment in 10 years, read to know-
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What are gold ETFs?
Gold ETFs track the price of physical gold of very high purity. They invest in gold bullions, coins, bars, etc. One gold ETF unit is equal to 1 gramme of gold. Like other ETFs, they are tradable in a share market.
Types of gold ETFs
Some prominent gold types are physical gold ETF, gold mining ETF, inverse gold ETF, and leveraged gold ETF.
Who can invest in gold ETFs?
An investor having a demat account can invest in gold ETFs. When they invest in a gold ETF, they purchase the net asset value (NAV), or units, of it. The price of the NAV changes with the price of gold assets of the ETF. Its price also fluctuates like the price of gold, but in the long term, a gold ETF is most likely to provide positive returns.
Top gold ETF in 10 years
In terms of annualised return (CAGR), UTI Gold ETF has been the top gold ETF in 10 years.
UTI Gold ETF
It has given a 11.33 per cent annualised return in the 10-year period.
It has assets under management of Rs 1,599 crore, while its net asset value (NAV) is Rs 72.8568.
UTI Gold ETF
Benchmarked against the domestic price of gold, the ETF has given a 12.10 per cent annualised return since its launch in March 2007.
It has an expense ratio of 0.50 per cent. The minimum investment in the ETF is Rs 20,000.
Value of Rs 10 lakh investment in top gold ETF
At an 11.33 per cent annualised return, the value of a Rs 10 lakh investment in the top gold ETF has turned into Rs 29,24,975, where Rs 19,24,975 are long-term capital gains.
What is an index mutual fund?
An index mutual fund follows an index and has the same combination of stocks in its portfolio as in the index that it is following.
Why are index funds called passive funds?
Since the fund manager doesn't need to do much work to select the stocks for the fund, index funds have a low expense ratio and are known as passive funds.
From an investor's perspective, an index fund is a much cheaper alternative to investing in India's top-rated companies than buying stocks of those firms.
What index do they follow?
An index fund may follow the Nifty 50, Nifty Next 50, BSE Sensex, BSE 500 benchmark.
Which is top index fund in 10 years?
In terms of annualised return (CAGR), the top index fund in 10 years is Bandhan Nifty 50 Index Fund - Direct Plan.
Bandhan Nifty 50 Index Fund - Direct Plan
The fund has given a 11.66 per cent annualised return in the 10-year period.
It has assets under management of Rs 1,666 crore, while its NAV is Rs 51.4785.
Bandhan Nifty 50 Index Fund - Direct Plan
Benchmarked against NIFTY 50 TRI, the fund has given a 12.98 per cent annualised return since its inception in January 2013.
With an expense ratio of 0.10 per cent, the fund has Rs 100 as the minimum SIP investment and Rs 1,000 as the minimum lump sum investment.
Value of Rs 10 lakh investment in top index fund
The fund has converted Rs 10 lakh one-time investment into Rs 30,12,841 in the 10-year period.