December 29, 2025
In 2025, gold has achieved a stunning absolute return of 79.3% annualized (as of December 24, 2025) in Indian Rupees – the highest return in the past decade.
This has intrigued investors in the precious yellow metal that has played its role as a safe haven and store of value, amid the macroeconomic uncertainty caused by Trump 2.0’s protectionist policies, especially in the areas of trade tariffs, work visas and geopolitical tensions.
Moreover, in times of eroding purchasing power of hard-earned money and volatility in financial markets, inflation has served as a hedge or effective portfolio diversifier.
Central banks, recognizing the risks – the high global debt to GDP burden of $111 trillion (tonnes) in 2025, about 94.7% of global GDP and a weak US dollar – have also bought gold as part of their reserve management.
If you also want to invest part of the investable surplus in gold to diversify, gold investment funds remain your best choice. At a time when the price of gold has risen remarkably, it makes sense to invest systematically through an SIP (Systematic Investment Plan) rather than investing a lump sum. And this is where gold savings funds make sense.
Gold savings funds (also known as gold mutual funds) function as a fund of funds that invest in their underlying gold ETFs. The gold ETFs, in turn, compare their performance to the price of physical gold.
In this main article we will take a closer look at the Nippon India Gold Savings Fund.
Fund overview
Launched in March 2011, when gold India was at Rs 21,087 per 10 grams, this program has seen its AUM grow with inflows and rise in the underlying asset i.e. gold.
According to the November 2024 portfolio, the Nippon India Gold Saving Fund’s assets under management are over Rs 48 billion (billion) – the third largest in this category.
It is an open-ended mutual fund program for which you do not need to open a demat account as this is a fund of funds program and your investments will go towards buying units of Nippon India ETF Gold BeES.
So you don’t have to pay any demat account fees, brokerage fees, etc. All you pay is the expense ratio and, upon repayment, an exit fee.
The fund invests 95-100% of its assets in units of Nippon India ETF Gold BeES. For liquidity purposes, it invests up to 5% in reverse repos and/or tri-party repos on government bonds or government bonds and/or short-term fixed deposits and/or schemes that invest primarily in money market securities or liquid schemes (including that of Nippon India Mutual Fund).
The investment objective is to pursue returns that closely match the returns of Nippon India ETF Gold BeES. There is no guarantee that the investment objective of the scheme will be achieved.
Since inception, the fund has achieved a CAGR of 10.8% (as of December 23, 2025).
The fund is currently managed by Himanshu Mange (since December 2023), who is a qualified Chartered Accountant with over 5 years of experience.
Previously, several other fund managers have handled this arrangement.
Nippon India Gold Savings Fund – Snapshot
| Date of commencement | 07-Mar-11 | SI return (CAGR) | 10.81% |
| Corpus (bn) | Rs 48.49 | Min. Lump sum & SIP | Rs 100 |
| Expense Ratio (Dir/Reg) | 0.35% / 0.13% | Exit Loading | 1.00% |
What is the investment strategy of Nippon India Gold Savings Fund?
To achieve its stated investment objective, the fund will primarily invest in units of Nippon India ETF Gold BeES. The investments can be made directly in Nippon India ETF Gold BeES or through the secondary market.
Furthermore, the fund also buys/sells the units of the underlying plan in the size of the creation units, also in the form of cash. The investment strategy is largely active in nature.
The fund aims to replicate the returns generated by the underlying ETF, i.e. the Nippon India Gold ETF, and is not expected to differ by more than 2%, on an annual basis, after deducting recurring charges.
The deviation from the underlying ETF will be mainly due to the receipt of cash flows, which take an average of five days given the existing operational procedure.
What is the portfolio of Nippon India Gold Savings Fund?
Given its investment mandate, the fund’s underlying portfolio consists mainly of Nippon India ETF Gold BeES (99.9% of total assets).
The remainder is in tripartite repos and cash and cash equivalents.
What are the historical returns of the Nippon India Gold Savings Fund?
Gold savings funds as a category have achieved an average CAGR of 17.3% over the past ten years. Over the past three and five years, the compound average growth rate was 34.3% and 21% respectively (as of December 24, 2025).
Due to a tracking error (of about 4%) of the underlying fund against the price of gold India, the Nippon India Gold Savings Fund has clocked a CAGR of 17.1% over the past ten years. Over the past three and five years, the fund has delivered a CAGR of 34.1% and a CAGR of 20.8% respectively.
Nippon India Gold Savings Fund – Performance
| Schema name | Absolute (%) | CAGR (%) | Risk ratios | ||||
|---|---|---|---|---|---|---|---|
| 1 year | 3 years | 5 years | 10 years | SD on an annual basis | Sharp | Sortino | |
| Nippon India Gold Savings Fund | 77.5 | 34.08 | 20.79 | 17.12 | 14.03 | 0.49 | 1.42 |
| Category Average* | 77.33 | 34.38 | 21 | 17.3 | 14.66 | 0.6 | 1.69 |
What about the risk profile of the Nippon India Gold Savings Fund?
The fund is classified as high risk on the risk-o-meter. This is because the gold price can be volatile at times. Factors such as changes in demand, geopolitical events, currency movements, etc. can affect the gold price and therefore the intrinsic value of the gold savings fund.
That said, the Nippon India Gold Savings Fund has exposed investors to slightly low risk (standard deviation of 14.03) compared to the category average as of December 24, 2025.
The risk-adjusted returns, as reflected by the sharp and sortino ratios of 0.49 and 1.42 respectively, while slightly lower than the category average, are justified by the low risk incurred by the fund.
Should you add the Nippon India Gold Savings Fund to your 2026 watchlist?
The uncertainties, whether macroeconomic and/or geopolitical, would support gold. Also the gold purchases by central banks.
Moreover, interest rate cuts by central banks around the world and the weakness of the US dollar would prompt savvy investors to consider gold.
But the risks are also that if the Trump 2.0 administration proves successful with its trade policies and the global economy also benefits, attention may shift away from gold.
The historical trend shows that gold’s long-term value makes it a suitable asset for investors with a patient and long-term investment horizon.
It makes sense to invest 5-10% of your entire portfolio in gold with a long-term view (five years or more), assuming a reasonably high risk. If you are a bit conservative, your allocation to gold can be 10-15% with a long-term view.
Gold is said to play the role of effective portfolio diversification in the long run.
That said, consider it based on your risk profile, broader investment objective, financial goals, time to achieve those goals, and the asset allocation that suits you best.
Be a thoughtful investor.
Have fun investing.
#Table Note: Data as of December 24, 2025
The return over the rolling period is calculated using the Direct Plan-Growth option. The returns over one year are calculated on an annual basis.
The standard deviation indicates the total risk, while the Sharpe ratio and the Sortino ratio measure the risk-adjusted return. They are calculated over a period of three years, assuming a risk-free interest rate of 6% per year, as gold funds carry a high risk.
*All gold savings funds are expected to calculate the average return of the category.
Please note that this table reflects past performance. Past performance is not an indicator of future returns.
The effects mentioned are for illustrative purposes only and not recommended.
Please contact your investment advisor for further assistance before investing.
Investments in mutual funds are subject to market risks. Read all scheme-related documents carefully.
Disclaimer: This article is for informational purposes only. It is not a recommendation and should not be treated as such.
With more than twenty years of experience in investments, personal finance, asset management and as an economic commentator, Rounaq Neroy potentially brings to the table the best investment ideas and perspectives to help investors make wise decisions. He was an integral part of Quantum Information Services Pvt. Ltd. since 2009.
#Nippon #India #Gold #Savings #Fund #Diversify #Portfolio #Opinions #Equitymaster #news