The air is filled once again with the shimmer of gold as India lights up Dhanteras 2025. This festival has been observed for centuries due to which the festivity is a propitious start of Diwali, when families buy gold coins, ornaments, or utensils as a beacon of good fortune and prosperity.
In digital finance, with changing inclinations to investment, however, the meaning of buying gold is evolving. The smart, safer and more efficient way to hold the precious metal this year, the experts are indicating the Gold Exchange-Traded Funds (ETFs) and Gold Fund of Funds (FoFs).
The Change of physical into digital Gold
Conventionally, the Indians have considered physical gold to be a store of value and an insurance against uncertainty, to use physical gold as jewellery, bars and coins. Nevertheless, in the past 10 years, the market has been experiencing a gradual shift from physical to digital gold investments. The increasing cost of storage, purity, and charging has increased awareness among investors of the inefficiencies of physical gold.
Gold ETFs and FoFs, on the contrary, offer a way to be exposed to the price of gold without the logistical and security risks of holding the metal. These vehicles are a reflection of the domestic gold price action, and investors can gain the advantage of a gold increase without actual possession of the precious metal.
As per data available on mutual fund trackers, assets under management (AUM) of Gold ETFs have increased greatly in 2025, which is a sign of increased investor confidence. The digital route has never been more attractive as gold prices are near record highs and the world is full of uncertainties, geopolitical strain on the one hand, inflationary pressures on the other, and so on.
The reason behind Gold ETFs being sensible this Dhanteras
Gold ETFs are nothing but securities in the stock exchange, which symbolise the physical holdings of gold. A Gold ETF is generally pegged to a gram of gold, and the price of the fund fluctuates in correlation to the gold in the market.
This is why they are becoming more and more popular:
- Transparency: Gold ETFs are pegged to the price of gold in the local market. The prices are open and can be easily followed.
- Liquidity: Physical gold has to have a buyer and incurs the cost of making charges, unlike the ETFs, which can be sold or bought at the current market prices.
- No Storage Trouble: Investors do not need to care about theft, storage or purity. The fund keeps the underlying gold in vaults safely.
- Tax Efficiency: Gold ETFs are subject to capital gains tax just like debt mutual funds, and in the case of a long-term holding of over three years, which is regarded as indexation benefits, then tax efficiency is high compared to physical gold.
Gold ETFs are quite appropriate to the current requirements of the new-age investor, who desires ease of use and security in a market that is becoming more and more convenient and digitalised.
Rise of Gold Fund of Funds (FoFs)
Gold FoFs can be used as an easy option for investors who do not have a demat account or choose the mutual fund route. Through these funds, investors invest in Gold ETFs, hence giving them an indirect exposure to the movements of the metal.
Gold FoFs are offered by mutual fund houses themselves and are suitable for systematic investors who want to have the option of SIP (Systematic Investment Plan). This gives the small investors time to accumulate their gold holdings progressively, averting the volatility risk due to cost averaging.
In addition, FoFs are simple to redeem, they are professionally managed, and there is no technical knowledge about the stock market is required. This ease is making them popular with first-time investors as well as those in need of diversifying their portfolios.
Gold as a Hedge During Uncertain Times.
The reputation of Gold as a haven still lingers on. Although there is an increased equity value and growth in the global economy, the metal remains a very important aspect in wealth preservation. The level of inflation is still feared in the world in 2025, and the central banks around the globe are keeping tight money policies.
India is not an exception, and with the equity market becoming volatile and risky to invest in, there is an influx of gold imports and investments by the common investor in India. By allowing paperless exposure, gold ETFs and FoFs are making investors find their way through this environment more effectively.
Financial planners tend to suggest 10-15 per cent of a portfolio to gold as a hedge against currency swings and inflation. Gold is also a useful addition to the portfolio, with the rupee acting erratically this year and the crude oil prices increasing.
The Convenience Factor
This is because Gold ETFs or FoFs are particularly appealing to invest in when the time of year is closing in on festivals such as Dhanteras. FoFs have minimum investments of ₹500, in which investors can purchase units immediately via online platforms or mobile applications. This digitalisation of gold investment is transforming cultural practices – with even young professionals now able to attend rituals like Dhanteras online.
In addition, the digital gold investments do not have the conventional disadvantages: the need to make a charge, the presence of a resale discount, or the purity of the gold. The gold behind these funds is at least 99.5% pure, and fund houses are controlled by SEBI, which provides an additional security.
Perspective: The Golden Age of Smart Investors
Dhanteras has traditionally been symbolised as the symbol of money, success and good care of properties. Although the tradition of purchasing gold has remained, its shape is changing. Investors, and more specifically, millennials and Gen Z, are placing more and more trust in paper gold and digitised gold instead of ornaments.
The mutual funds (gold ETFs and FoFs) will gain even more ground as financial literacy in India increases, and the access to mutual funds becomes easier because of the new technology offered by fintech. They are the combination of tradition and technology, respecting the cultural mood and being consistent with the new financial scrupulousness.
Conclusion
It is an even smarter gold rush this Dhanteras, the gold rush. Investors are not having to line up at jewellery outlets and are going to their screens and purchasing digital gold, which is equally shining even without the burden of its physical presence. The new-age instruments of tradition are the gold ETFs and FoFs, with a combination of tradition and innovation.
To the businessman who wants to combine the feeling of Dhanteras with sound financial prudence, these products are the ideal ones, as prosperity does not need to be bought, but to flourish.
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