Top 5 Gold Funds Deliver Over 65% Returns in One Year: Must-Watch Options Before Entering 2026

The year 2025 has turned out to be a golden year for Indian investors—literally. Gold has delivered an extraordinary rally this year, surprising even seasoned market watchers. As of December 1, 2025, the yellow metal recorded a stunning 69.3% return, a performance not seen in the past decade and even higher than the surge witnessed in 2019–2020 during the global pandemic. With this impressive comeback, gold has once again proven to be a reliable asset during periods of global uncertainty.

As investors look forward to 2026, several gold saving funds and ETFs have emerged as strong performers. Among them, schemes linked to SBI, LIC and other asset management companies have generated over 65% returns in a year, making them top contenders for investment watchlists in the coming year.

Why Did Gold Prices Rise So Sharply in 2025?

The global economic environment has played a crucial role in supporting gold’s extraordinary rally. Several geopolitical and macroeconomic factors contributed to pushing gold prices higher:

1. Geopolitical Tensions

Ongoing conflicts such as the Russia–Ukraine war and persistent U.S.–China trade friction kept global markets on edge. In times of geopolitical instability, investors tend to flock toward safer assets—and gold remains the most trusted safe-haven investment.

2. Sluggish Global Growth

Major economies experienced slower economic activity in 2025, leading market participants to shift towards less volatile assets.

3. U.S. Federal Reserve Policy

The U.S. Federal Reserve cut interest rates by 50 basis points this year. Lower interest rates generally weaken the dollar and make gold more attractive for global investors.

4. Rising Gold Reserves

Many governments increased their gold holdings because their debt-to-GDP ratio was significantly higher than comfortable levels. This trend further supported prices in the international market.

Why Gold Remains a Favourite Among Indian Investors

In India, gold has always been more than just a commodity—it is a symbol of wealth, safety and long-term security. During inflation, economic turmoil or stock market volatility, gold often acts as a stabilizer in investment portfolios.

But the way Indians invest in gold is changing. Instead of buying physical jewellery, more investors are choosing paper gold through:

• Gold Saving Funds

• Gold ETFs

• Gold Mutual Funds

These options offer better liquidity, transparency, low cost and no storage risks.

Why Choose Gold Saving Funds?

Gold saving funds are mutual funds that invest primarily in Gold ETFs. They allow investors to benefit from gold price movements without needing a Demat account. Their biggest advantages include:

• Low minimum investment (starting from ₹100–₹500)

• SIP options to average cost during price fluctuations

• Professional fund management

• Easy liquidity

SIP-based investing is particularly effective when gold prices are high, as it helps reduce average cost and manage risk more efficiently.

Top 5 Gold Saving Funds That Delivered Stellar Returns

As per recent reports, the following gold saving funds have offered exceptional performance and are recognized for consistent long-term returns:

• LIC MF Gold ETF Fund of Fund

• SBI Gold Fund

• HDFC Gold ETF Fund of Fund

• ICICI Prudential Regular Gold Savings Fund

• Aditya Birla Sun Life Gold Fund

These funds track high-performing Gold ETFs that have generated returns close to or above their respective benchmarks.

Over the long term, gold saving funds have remained strong investments:

• 10-year average CAGR: ~16.5%

• 5-year CAGR: ~20%

• 7-year CAGR: ~21.7%

These numbers highlight gold's importance as a steady wealth-building asset.

How Much Should You Invest in Gold?

Despite gold’s shiny performance in 2025, financial experts advise investors to maintain 10–15% allocation to gold in their portfolios. This proportion helps balance risk without overloading on a single asset class.

While gold is ideal for diversification, putting too much into one asset—no matter how attractive—may not be wise. A disciplined approach through SIPs and consistent monitoring is key.

Should You Add Gold Funds to Your 2026 Watchlist?

Absolutely. The stellar returns of 2025 have boosted confidence among investors, but it is important to remember that past performance is not a guarantee of future returns. Before choosing a gold fund for 2026:

• Check the fund’s long-term performance

• Evaluate the track record of the AMC

• Prefer SIPs for volatility management

• Avoid investing a large lump sum when prices are too high

Gold saving funds are especially helpful for beginners who want to start small and invest gradually without the need for physical gold or a Demat account.

As 2026 approaches, keeping these high-performing gold funds on your watchlist can help you make informed investment decisions.