Gold mutual funds have emerged as strong performers over the past five years, supported by a sustained rise in gold prices, global economic uncertainty, inflation concerns and increased investor preference for safe-haven assets. Data available as of May 4, 2026, shows several gold-focused mutual funds delivering annualised returns of over 24% CAGR, reflecting the growing appeal of gold as a portfolio diversification tool.

Unlike physical gold investments, gold mutual funds provide exposure through professionally managed schemes that invest either in domestic Gold ETFs or overseas gold-linked assets. These structures enable investors to participate in gold price movements through SIPs or lump-sum investments without concerns related to storage, purity or physical ownership.

According to the latest data shared by Angel One, DSP World Gold Mining Overseas Equity Omni FOF emerged as the top performer with a 5-year CAGR of 26.46%. The scheme manages assets worth ₹1,769.37 crore and carries an expense ratio of 1.65%.

However, DSP’s fund differs significantly from traditional domestic gold schemes. Rather than tracking physical gold prices directly, it invests in international gold mining companies through overseas mutual funds and ETFs. This means performance depends not only on gold prices but also on mining company profitability, global equity markets and sector-specific developments.

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Domestic gold-oriented offerings

Among domestic gold-oriented offerings, SBI Gold Fund ranked second with a 25.06% five-year CAGR and an AUM of ₹14,997.68 crore, making it one of the largest schemes in the category. The fund primarily invests in SBI Gold ETF and seeks to closely mirror domestic gold price movements.

Quantum Gold Savings Fund followed closely with a 24.97% CAGR, while ICICI Prudential Gold ETF FOF generated 24.93% and HDFC Gold ETF FOF delivered 24.90% over the same period.

The broader list of top-performing gold mutual funds included:

Aditya Birla Sun Life Gold Fund: 24.88%
Axis Gold Fund: 24.87%
Nippon India Gold Savings Fund: 24.73%
Kotak Gold Fund: 24.73%
LIC MF Gold ETF FOF: 24.70%

The narrow return difference across many schemes suggests that most domestic gold funds are following similar passive investment structures. These funds generally operate as fund-of-funds (FOFs) that invest in underlying Gold ETFs holding physical gold bullion.

Since they aim to replicate gold price movements rather than actively beat them, performance variation among domestic funds often depends on operational efficiency and costs.

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Experts tracking passive investment products note that investors should evaluate metrics beyond just returns. Factors such as expense ratio, tracking error and fund structure play an important role in long-term outcomes.

Expense ratios

Expense ratios vary considerably among these schemes. Quantum Gold Savings Fund had one of the lowest expense ratios at 0.04%, while DSP's overseas mining-focused strategy charged 1.65%, reflecting its more specialized and international exposure.

Tracking error is another key measure for investors. It indicates how closely a fund mirrors the performance of its benchmark or underlying gold prices. Lower tracking errors generally indicate better replication efficiency.

Meanwhile, SBI Gold Fund and HDFC Gold ETF FOF stood out not only for performance but also for their large asset bases, with AUMs of ₹14,997.68 crore and ₹10,990.19 crore, respectively. Larger AUM often indicates stronger investor participation and liquidity.

The strong performance of gold mutual funds over the last five years has come amid rising geopolitical tensions, central bank buying and volatility across financial markets. While gold continues to serve as a diversification tool and inflation hedge, investors are generally advised to assess risk profiles, costs and investment objectives before increasing allocation to the asset class.