Gold Vs Nifty: What 1-year Sip Returns In Etfs Tell investors — Should You Make A Switch?

Gold prices surged to grounds highs connected Tuesday, crossing nan Rs 1 lakh people per 10 grams successful India amid increasing tensions betwixt US President Donald Trump and Federal Reserve Chair Jerome Powell complete liking complaint cuts.

On nan Multi Commodity Exchange (MCX), June golden futures jumped 1.71% to Rs 98,946 per 10 grams, aft hitting an intraday precocious of Rs 99,178. Including GST, nan value of golden has now breached Rs 1,00,000, mounting a historical benchmark successful home markets.

Globally, COMEX June golden contracts besides touched caller life highs. Prices deed $3,500.8 per ounce, aft climbing past earlier highs of $3,495.5 and $3,485.9 per ounce.

The rally successful golden comes contempt accepted safe-haven request for nan US dollar weakening. Analysts property nan spike to investor formation to golden amid rising uncertainty astir US monetary argumentation and intensifying governmental unit connected nan Fed to slash liking rates.

Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities, said: "Gold prices traded pinch precocious volatility aft a awesome gap-up opening supra Rs 99,000 connected MCX, oscillating successful a wide scope betwixt Rs 99,000 and Rs 98,150 done nan session. The rally continues to beryllium fueled by nan Federal Reserve’s reluctance to trim liking rates immediately, contempt increasing unit from erstwhile President Trump, who has been vocal astir urging complaint cuts. This divergence has further enhanced gold’s entreaty arsenic a safe haven, pushing prices to caller life highs successful some Comex and MCX. The ongoing uncertainty astir monetary argumentation direction, ostentation risks, and geopolitical waste and acquisition concerns is keeping sentiment buoyant for gold. However, pinch prices astatine grounds levels, intraday volatility is apt to persist."

Gold ETFs vs Nifty ETFs

Over nan past year, golden has outshone equities successful SIP performance.  Gold ETFs person outperformed Nifty 50 ETFs complete nan past twelvemonth owed to world uncertainty and inflation, but Nifty 50 ETFs stay basal for semipermanent equity exposure. Smart portfolios often see some — for maturation and stability.

Over nan past year, Gold ETFs person importantly outperformed Nifty 50 ETFs, drafting investor attraction toward nan yellowish metallic arsenic a hedge against uncertainty. While equity markets remained volatile amid world macroeconomic concerns, geopolitical tensions, and fluctuating liking complaint expectations, golden emerged arsenic a safe haven asset. Most golden ETFs delivered returns betwixt 45% and 55%, compared to a humble 2–3% from Nifty 50 ETFs.

This divergence successful capacity highlights gold’s domiciled during periods of economical stress. Central slope buying, inflationary pressures, and a weakening dollar further supported golden prices, pushing them to grounds highs globally and successful India. Meanwhile, nan equity markets faced headwinds owed to concerns complete net growth, world liquidity tightening, and consequence aversion.

A monthly SIP of Rs 10,000 successful SBI Mutual Fund’s Gold ETF delivered a stellar XIRR of 54.35%, compared to a humble 2.93% XIRR from nan SBI Nifty 50 ETF. This stark opposition highlights gold’s spot arsenic a protect plus amid economical uncertainties.

The inclination was accordant crossed different Nifty 50-linked ETFs, wherever returns remained muted. Quantum Nifty 50 ETF FoF recorded nan champion capacity among them astatine 3.03%, followed by LIC MF Nifty 50 ETF astatine 3.01%. Invesco India Nifty 50 ETF posted nan lowest return successful nan conception astatine 2.87%.

On nan different hand, golden ETFs saw consistently beardown gains. Axis Gold ETF led pinch a 54.85% XIRR, followed by ICICI Prudential Gold ETF astatine 54.62%, while Nippon India ETF Gold BeES reported 48.32%.

Gold ETF vs Nifty 50 ETF

The surge successful golden prices has been driven by aggregate macroeconomic factors including cardinal slope golden buying, fluctuations successful nan dollar index, and inflationary concerns. According to Tata Mutual Fund, nan ongoing request surge and world uncertainty person positioned golden arsenic a preferred investment, pinch expectations of sustained inflows and value resilience.

However, March saw nett outflows of Rs 77.21 crore from golden ETFs, a reversal from Rs 1,979.84 crore inflows successful February, attributed to profit-booking. Despite this, mean assets nether guidance (AAUM) for golden ETFs roseate 3.82% month-on-month to Rs 57,101.29 crore, underlining continued investor interest.

“This crisp emergence reflects a increasing investor penchant for safe-haven assets amid world economical uncertainty, rising geopolitical tensions, and persistent inflationary pressures. Additionally, nan sustained rally successful world golden prices and nan weakening of awesome world currencies against nan US dollar further enhanced nan entreaty of golden arsenic a strategical portfolio diversifier during nan year,” said Nehal Meshram, Senior Analyst – Manager Research, Morningstar Investment Research India.

Ajay Garg, CEO of SMC Global Securities, noted a reversal successful March, wherever golden ETFs knowledgeable nett outflows of Rs 77.21 crore from Rs 1,979.84 crore successful February, chiefly owed to profit-booking, contempt a 3.82% maturation successful AAUM to Rs 57,101.29 crore. 

Surge successful golden prices

Gold’s entreaty arsenic a hedge against volatility has grown, particularly arsenic world markets stay uneasy. On paper, nan numbers look compelling. This surge successful golden prices, up complete 25% successful six weeks, suggests imaginable short-term corrections, yet nan semipermanent outlook remains positive. 

However, experts be aware against shifting wholly from equity to gold. While golden ETFs connection fantabulous portfolio diversification and enactment arsenic a volatility cushion, they are not substitutes for semipermanent equity investments. Nifty 50 ETFs, contempt short-term underperformance, proceed to connection wealth-building imaginable done vulnerability to India’s top-performing blue-chip companies.

In essence, nan existent outperformance of golden ETFs should beryllium seen arsenic a reminder of nan value of plus allocation, not a logic to wantonness equities altogether. Balanced portfolios use from nan strengths of some plus classes.

Industry experts, including those from Motilal Oswal Wealth Management, expect volatility but urge strategical buying during dips. Their forecast places golden prices betwixt $3,350–3,500, pinch a home scope of Rs 96,500–1,00,000, perchance peaking astatine Rs 1,06,000. This strategy aligns pinch broader marketplace sentiment that sees golden arsenic a unchangeable finance amidst economical fluctuations.

Tata Mutual Fund further supports nan conception that medium-term golden prices will stay patient owed to continued cardinal slope buying, expected monetary argumentation adjustments, and geopolitical factors. Such conditions person prompted starring financial institutions to set their projections, underscoring gold's resilience and imaginable arsenic a safe haven asset. As nan marketplace continues to navigate done economical uncertainties and inflationary pressures, gold's domiciled successful finance portfolios is apt to stay pivotal.

Investing successful gold 

With golden delivering a coagulated 18% CAGR complete nan past 3 years, galore investors are now asking nan large question: Should they trim equity SIPs and allocate much to gold? The yellowish metallic has outperformed galore accepted investments recently, powered by geopolitical risks, cardinal slope accumulation, and persistent inflation.

“Gold has seen a crisp emergence successful caller years, delivering a CAGR of 18% complete nan past 3 years. This surge is mostly attributed to accrued world uncertainty, geopolitical tensions, inflationary pressures, and cardinal slope buying. While golden has performed good recently, it's important to admit that its returns person historically been inconsistent,” said Chethan Shenoy, Executive Director & Head - Product & Research astatine Anand Rathi Wealth Limited.

He added, “Gold often shines during times of uncertainty, acting arsenic a hedge, but whitethorn underperform during unchangeable aliases bullish equity marketplace phases. Therefore, knowing nan risk-adjusted return and semipermanent domiciled of golden successful a portfolio is crucial.”

"When markets are uncertain, golden acts arsenic a hedge but information shows that erstwhile markets autumn by 10%, golden typically delivers conscionable 3–4%. By utilizing indebtedness instead, investors tin gain astir 7% during specified periods. Given this, it's wise to diversify beyond golden to trim consequence and heighten returns. For 2025, a balanced portfolio pinch 80% equity and 20% indebtedness is recommended, arsenic these assets often move successful other directions, helping stabilize your portfolio. Historically, this operation has delivered returns of astir 12%. If you still want vulnerability to gold, limit it to not much than 10% of your portfolio, and opt for Gold ETFs for costs ratio and liquidity," Shenoy further added.