SBI Gold Fund Review – Think before you Invest

By
Hemant Beniwal
-
54
SBI Gold Fund Review - Think before you Invest

Last Updated on April 24, 2026 by teamtfl

Every time gold rises sharply, fund houses launch gold products. Every time. It happened in 2011. It happened again around 2020. And when gold crosses Rs.1,52,000 per 10 grams – as it has today in April 2026 – the phones start ringing again.

In 2011, when SBI Mutual Fund launched its Gold Fund NFO, 24-karat gold was trading around Rs.26,000 per 10 grams. People were rushing to participate in the “gold rush.” The question I asked then is the same one I am asking now: Is it because gold prices will rise further, or because they have already risen in the past?

Those are two very different reasons to invest. And confusing them is how investors lose money.

Quick Answer

Never invest in a Mutual Fund NFO – gold or otherwise. The same fund in its existing form works just as well after the NFO closes. For gold specifically: keep 5 to 10% of your portfolio in gold as a hedge, not as a growth investment. At Rs.1.52 lakh per 10 grams in 2026, gold is at historic highs. The question is not “should I invest in gold” but “what percentage is appropriate given my overall asset allocation.”

Gold fund investment India

Never invest in a Mutual Fund NFO – the rule holds for gold too

On a distribution house Facebook group in 2011, I saw this exchange:

Relationship Manager: “Now invest in Real 24 Carat Gold in Monthly SIP. SBI presents SBI GOLD FUND.”

Boss: “Let’s create history this time.”

Relationship Manager: “We are ready to rock.”

They were not going to rock. They were going to sell you a product because gold had already gone up – not because it would continue to do so. Fancy of Gold, craze of SIP, advertising campaign, supporting views from media, and a big push from agents may drive you to the wrong decision.

The case against NFOs has nothing to do with the underlying asset. It applies to every NFO – equity, gold, debt, sector.

  • An NFO gives you no return history to evaluate.
  • The same strategy is available in an existing fund with a track record.
  • NFOs are launched when the AMC believes it can raise the most money – which is when the underlying asset is hot. Hot assets are often overpriced assets.
  • Every day you wait for allotment is a day your money earns nothing.

If you want exposure to gold, Nippon India Gold ETF (formerly Reliance Gold Savings Fund), HDFC Gold Fund, SBI Gold Fund – they all track the same underlying commodity. Choose an existing fund with history and start a SIP. Do not wait for an NFO.

The investor psychology pattern – it repeats every cycle

Look at what happened with IT sector funds between 1998 and 2003. Funds launched at the peak of the dot-com bubble. Investors who poured money in at the height lost 70 to 80% of their investment. The sector itself recovered – but the investors who bought at peak prices took a decade just to break even.

IT Sector Fund performance India

The same logic applied to infrastructure funds in 2007. Real estate stocks in 2007. And it applies to gold whenever prices have run sharply.

Manufacturers and distributors sell the trend of the season. When gold is in demand, they launch gold products. When equity is in demand, they launch sectoral equity funds. Whether or not the product is useful for you is not their primary concern. Their commission is earned on the transaction, not on your outcome.

Warren Buffett said it best: “When all the people are thinking in the same direction, no one is thinking.”

Gold at Rs.1,52,000 per 10 grams – does it make sense to buy now?

In 2011, I wrote that gold had already risen 587% in the preceding decade. In 2026, gold has risen nearly 6x again from those 2011 levels. Both times, the argument for more gold was the same: uncertainty, dollar weakness, inflation, geopolitical risk.

I have one consistent view on gold as an investment: trees do not grow to heaven.

I cannot tell you whether gold will be Rs.2 lakh or Rs.1 lakh per 10 grams in five years. Nobody can. But I can tell you this: if you are buying gold because it has already gone up, you are the one who is likely to be left holding it when it eventually corrects – as it always does. Gold went down 70% from its 1980 peak and stayed depressed for two decades.

The right question is not “will gold go up?” The right question is: what percentage of my portfolio should be in gold based on my goals, horizon, and existing allocation?

🚫 Note on Sovereign Gold Bonds (SGBs)

SGBs were India’s best gold investment option for nearly a decade – 2.5% annual interest, tax-free capital gains on maturity, no storage risk. But the government stopped issuing new SGB tranches after February 2024. No new issues have been announced for FY 2026-27. Existing SGBs can be bought in the secondary market on NSE/BSE, but check the premium over face value carefully before buying.

How to invest in gold correctly

Gold is insurance, not wealth creation. It hedges against currency devaluation, inflation spikes, and geopolitical shocks. For most Indian investors, 5 to 10% in gold as part of a diversified portfolio is appropriate. More than that is speculation, not investing.

The right instruments for gold in 2026:

  • Gold ETFs: Nippon India Gold ETF, HDFC Gold ETF, SBI Gold ETF. Require a demat account. Lowest cost, tracks price closely.
  • Gold Savings Funds (Fund of Funds): SBI Gold Fund, HDFC Gold Fund. No demat needed. Slightly higher expense ratio than ETFs. Allows SIP without demat account.
  • SGBs (secondary market): Available on NSE/BSE. Still carry the 2.5% interest and tax-free redemption at maturity. Buy at reasonable premiums only.
  • Physical gold: Making charges, storage cost, purity risk. Appropriate for jewellery with cultural/sentimental purpose. Not ideal for investment.

Also read: Sovereign Gold Bonds: Complete Guide for Indian Investors (2026 Update)

Is your portfolio over-exposed to gold or under-exposed to equity?

Most Indian portfolios I review have too much in physical gold and FDs, and too little in equity. The Comfort Asset Trap – gold, property, FDs – feels safe but quietly underperforms inflation over 20 years. We review and restructure portfolios as part of our financial planning process.

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Frequently asked questions

Should I invest in gold now with prices at Rs.1.52 lakh per 10 grams?

The right question is not “will gold go higher” but “what is my current gold allocation and does it need adjustment.” If you have less than 5 to 10% of your investable portfolio in gold, adding some as a hedge makes sense regardless of price – through a SIP in a gold ETF or gold savings fund. If you are already at 10% or above, adding more at record prices is speculation, not investing.

Why should you never invest in a Mutual Fund NFO?

NFOs offer no track record, no historical NAV data, and are typically launched when the AMC can raise the most money – which means when the underlying asset is already hot. An existing fund with the same strategy, the same portfolio, and the same fund manager gives you all the same exposure with the added benefit of performance history. There is no advantage to buying an NFO over an existing equivalent fund.

What is the difference between a Gold ETF and a Gold Savings Fund?

A Gold ETF trades on the stock exchange like a share – you need a demat account to buy it and it has the lowest expense ratio. A Gold Savings Fund (Fund of Funds) invests in a Gold ETF but does not require a demat account – you can invest through the AMC directly or via SIP like any other mutual fund. The additional layer adds slightly to the expense ratio (typically 0.1 to 0.3% extra). For investors without a demat account, Gold Savings Funds are the more convenient option.

How are gold fund returns taxed in India?

Gold ETFs and Gold Savings Funds are treated as non-equity funds for taxation. For units purchased after April 1, 2023, all capital gains are taxed at your income slab rate regardless of holding period. For units purchased before April 2023 and held over 24 months, LTCG is taxed at 12.5% without indexation. SGB redemption at maturity (after 8 years) is fully tax-exempt – this remains a key tax advantage of SGBs for existing holders.

What percentage of your portfolio is currently in gold? Are you thinking about adding more at current prices? Drop your situation in the comments.

54 COMMENTS

  1. Can someone let me know how is the SBI GOLD FUND- DIRECT?

    bcz I want to invest lumsum amount of 1 lac for 1 year will that profitable?

  2. Sir I have invested in sbi gold fund 15k per yr.since 2011 for three yrs regularly after three years stopped.sir now I want do draw my money.what procedure pls guide me

  3. Sir,
    I was searching for Gold price and SIP and found your article, its nice and its true. I started my SIP in SBI Gold Fund during NFO back in sept 2011, with Rs 1000/- per month, on the other side i have equity SIPs in other mutual funds (not keeping all the eggs in one basket rule)
    Now in October 2015, i am still continuing my SIP in SBI Gold Fund and price of gold has fallen down since the days of your article posted.
    My query is should i hold on with SIP for another 2-5 years, till gold price touch at least 29K near.

    your suggestion is needed

    Thanks

  4. never invest in SBI gold mutual growth fund, leave alone growth you won’t even get your principal amount back at the time of 3 year redemption, I am a victim of investing 5K every month for 3 years and against principle investment of 180K today after redemption got around 164K – it’s worst managed MF, never ever invest in SBI Gold MF

  6. i have been investing in ‘sbi gold fund-regular plan-growth’ since 2011 in sip mode (rs. 2000/- pm). but i am not getting satisfactory return from it. now my question is should i go on investing for better return in future or sell it off?? kindly suggest.

  7. I have invested in SBI Gold Fund So kindly show me how type of this MF and is it good to go long in this fund? kindly suggest me

  8. Hello,

    I want to invest some money to buy a property, but i have only 10 % of the total cost of the property, can someone suggest me where to make aN investment so that i get two times or more of the money invested in the time period of one month or two. I have to invest without any risk as the money i will be investing is the only fund i have. I cant opt for home loan as i dont file IT returns which is a must in case of home loans, and no support from anyone, Please advice.

    • Simran,

      To get double or more than double in a time period of 2-3 months will be like a day dreaming. It is unrealisitic to expect like this. Look for some other alternatives (Look for a property in the range of the money you have) or delay the plan of purchase for some period of time till you gain enough money.

      Lastly once again : To get double or more than double in a time period of 2-3 months will be like a day dreaming

  10. my self very new person in market.i has read all comments.i like to appreciating Hemant Beniwal .nowadays what is best thing to invest, I have a some spare money.looking for safe,high returns and long term.what is your suggestion?

  11. Hi Mr. Hemant Beniwal,
    Sir I am ARN Holder but don’t take much interest in selling Mutual Funds. I prefer SIP and sell only my very close friends or relatives. In 2008 ( when I was not in this field) invested in DSP Merrill Lynch Tax Saver Fund – Growth Rs.40,000+10,000 first investment on 23rd Jan, and second (Rs.10000) on 28th FeB on recommandation/advise of a broker. Later I read in news papers that DSP Merrill Lynch bankrupted. Then I decided not to believe others and take my own decisions. So I took the AMFI exms in 2009 By d way, DSP Black Rock is paying me Rs. 53,000. Should I withdraw it and invest in other fund or wait for good returns?
    Second question related SBI Gold fund. 3 days ago,One of Broker co.’s manger came at my residence and suggested me to start invest and motivate others to invest in SIP of Gold Fund as gold is a requirement of every Indian at the time of their children’s marriage. So I filled SBI Gold Fund (SIP of Rs. 1000 per month). Today I read your review. I was told that SBI is investing directly in Gold untis. Already I am investing Rs. 4000 per month in different tax saver funds. I will stop SBI Gold SIP. But Sir, which is the best way to invest in Gold if I want to invest only Rs. 1000 PER MONTH.

  12. dear

    I am very much new to SBI gold fund scheme exposure….can you plz guide me.

    Hope, you get to reply for this comment..

  13. sir, i am thinking to invest some amount monthly to sbi gold fund for my child education, who is now 3yrs old. will it give good return, or suggest me the best option.

  14. Views expressed by Mr. Hemant Beniwal are very useful and one should read their views and understand before investing. Mr. Hemant Beniwal is very good Financial Planner as I am reading his articles since last one month .
    thanks

  15. Hi Hemant,
    First of all thanks for all your helpful advice.
    I am planning to start investing in Goldman BEES gold ETF through my broker Angel Broking.
    They are giving me delivery brokerage of .03 or 30 paisa in delivery.
    which will come some where Rs7.5/- for 1 unit = 2500/-
    Is this brokerage OK or i should negotiate with some other broker ?
    Thanks
    Ankur

  17. Good article. I think you have tried to tackle 2 separate angles in this article –
    a. Is gold a good investment right now (given that it has risen so much)
    b. Is investing in SBI Gold fund a good idea.
    These are 2 separate aspects .. e.g. even if (a) is true, (b) may not be true – bcos of fees, taxation etc. I would appreciate more clarification on the (b) aspect of this.
    Regarding actually investing in gold – the rise in price has been astounding – I keep thinking it should plateau now .. but doesn’t happen (not until last week anyway). I think the demand from the ‘unbanked masses’ and people not yet investing in equities will keep the value of gold high for some time.

  18. hi hemant, can u help me in finding the good insurance policy, one of my close relative have suggested for sbi shubh nivesh, is it worth going for it..??
    I would be grateful if you provide your insight over this.

  19. I actually don’t believe in declaring ‘equity’ as the best asset class. I believe that no asset class can be the most superior, every asset class goes through its own economic cycles. Sometimes Gold is the best, sometimes real estate, sometimes equity, so its wise to invest across different asset classes.

    • Hi Sridhar
      I agree with you that asset allocation is the most important thing. Nobody can predict the returns from a particular asset class. Having a diversified portfolio is the best thing to do and both equity and gold have a place in that.

  21. Dear Hemant.Ji
    Indeed, an eye opener, and a dissuade-
    Not to go with the herd, imminently- vulnerable to sheer Exploitation.

    well, another scheme from Tanisq- jewellery- alike SIP- monthly scheme-
    with the purchase of Physical gold and kept in their custody.unlike- ETF /ETS.

    Ofcourse, Equity, predominantly a very long term investment strategy its.
    fill & forget it all along its tenure..

    and your say- most pragmatic , affordable Plan be..!!
    for purchase of physical gold,
    for an event 2-3yrs. ahead , medium term
    or a childs marriage- 10yrs later long term
    or for regular events- child birthday.. short term.

    Hope, you get to reply for this comment..

    • Hi GSReddy
      Investment in equity mutual funds is the best option to meet your long term goals.But you can not afford to forget it along its tenure.You must track it atleast once a year.It is quite possible that a fund in your portfolio may not perform as per your expectations in the long term.You have to take corrective action before it is too late.

  22. Hi Hemant,
    Excellent article and a novel way of making the point with the google search comparison!
    So far, I have stuck with MFs and keep buying every month when the market dips. If I plan to start investing in gold for 5-10% of total allocation, will it be best to start off in this manner with Gold: buy in small amount every quarter, or any other way advisable?

  24. Quantum Gold saving fund launched in May11 this year appears to be doing well. Is it worthwhile investing in that scheme as it is also a fund of funds predominantly.

      • Lower expense ratio is a good thing. But what about quality of management,experience in handling funds,quantum of funds handled. SBI and reliance are big MF with vast experience and these qualities may prove more important than lower expense ratio alone.I heard Quantum MF also has good reputation. Comparatively will Quantum do better than SBI Gold fund and /or reliance Gold fund?

          • Hi Hemant
            I am a fan of Ajit Dayal. I never miss to read his articles and make it a point to watch his TV interviews. I like his Quantum Theory Of Investment. In his funds role of fund manager has been significantly reduced as systems have been put in place.

  25. Hello hemant,

    Thanks for the wonderful arcticle yet again.

    I wanted to ask i am buying 3 Units every Month as SIP mode of GOLDBEES for an long term perspective.

    is it a wise option. Simultaneously i have an SIP of 15K in 5 MF in Core & Satellite.

    Please let me know your views on GOLDBEES for 5 yrs term.

    • Hi Samir,
      If your are doing it for 5 year term – I am not sure what will happen. Plus I can see that almost 30% of your money is going in gold – not a good idea.

  28. Hi Hemant

    I agree with you on this
    – gold should be small part of asset allocation and the reason of buying gold should not be rise in price.
    You have hit the nail on the head.
    The most important thing is the proper asset allocation.Both equity and gold mutual funds have a place in a portfolio.For long term investment equity mutual funds should form core of the portfolio with gold funds acting as a hedge to balance and add stability to the overall portfolio.So, invest in a gold fund once you have built a well diversified portfolio of equity mutual funds with 5 to 10% portfolio allocation to gold.

    • Hi Dr Koushik
      Please read the post Best Mutual Fund For SIP.This will help you in constructing your mutual fund portfolio to meet your long term goal.
      Since you are new to mutual fund investing I would like to stress some points.All mutual fund investments are subject to market risks.How you construct your portfolio depends on your risk appetite.
      In the short term you may see a lot of volatility in mutual fund investing but if you remain invested for more than five years you can expect annual return of around 12% from your investment in equity mutual funds.
      The best way to start is to invest through monthly SIPs.After starting you have to be patient and give time to your investments to grow and ignore the market noise.SIPs work best during volatile markets.
      Initially you can select two or three large cap and large and midcap funds for your portfolio.Once you gain experience you can add one multicap and one mid and small cap fund.

    • Hi Dr Kaushik
      HDFC Midcap opportunities is a good fund.It can be part of your portfolio provided the core of your portfolio has large and large and midcap funds.

  32. I like the way you have put Sharma Ji and Verma ji. Also you have pointed correctly, Equity is the nest asset class for long term investment and gives better returns. Gold is peaking to its highest, invest in Equity for better return on your investments.

    • Hi Vishal,
      I may not agree with this “Gold is peaking to its highest” but I don’t know or I feel anybody knows how to value an asset class like gold.

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