SIP: Gold ETF vs Nifty 50 ETF – Which ETF Has Delivered Better Returns?

Exchange-traded funds (ETFs) are investment vehicles designed to track specific indices, assets, or sectors, allowing investors to gain exposure to a diversified portfolio without directly purchasing individual stocks. Unlike stock investments, which can be highly volatile, ETFs provide built-in diversification, reducing overall risk.

In periods of market highs, investors often seek stability. While equities, such as those tracked by the Nifty 50 ETF, offer exposure to top-performing companies, Gold ETFs serve as a hedge against inflation and economic uncertainty. But which of the two has provided better long-term returns for investors using a systematic investment plan (SIP)?

To answer this, let us compare the past almost 10 years of SIP investments in SBI Gold ETF and SBI Nifty 50 ETF to see how they have performed.

SBI Gold ETF: Performance for Almost 10 Years

SBI Gold ETF aims to provide returns that closely correspond to movements in the price of physical gold. Gold has long been considered a safe-haven asset, often performing well during economic downturns and inflationary periods.

• SIP Amount: ₹20,000 per month
• Investment Period: 22 July 2015 – 10 March 2025
• Total Number of SIPs: 116
• Total Amount Invested: ₹23,20,000
• Current Portfolio Value: ₹47,39,068
• XIRR (Extended Internal Rate of Return): 14.27%
• Expense Ratio: 0.73%

SBI Nifty 50 ETF: Performance for Almost 10 Years

The SBI Nifty 50 ETF is designed to replicate the performance of the Nifty 50 Index, which consists of India’s top 50 companies across various sectors. 

• SIP Amount: ₹20,000 per month
• Investment Period: 10 March 2015 – 10 March 2025
• Total Number of SIPs: 116
• Total Amount Invested: ₹23,20,000
• Current Portfolio Value: ₹45,35,685
• XIRR (Extended Internal Rate of Return): 13.41%
• Expense Ratio: 0.04%

Gold ETF vs Nifty 50 ETF: A Direct Comparison

While both ETFs have demonstrated strong returns, SBI Gold ETF has outperformed SBI Nifty 50 ETF in terms of XIRR. However, the Nifty 50 ETF has a significantly lower expense ratio, which can have a compounding effect on long-term investments.

Conclusion: Evaluating Investment Choices

The comparison highlights that both Gold ETFs and Nifty 50 ETFs have delivered competitive returns over the past decade. Gold ETFs have performed better in this specific period, but equity markets have historically outperformed gold over extended horizons.

Investors must consider their risk appetite, financial goals, and investment horizon before selecting an ETF. Gold is typically seen as a defensive investment, whereas Nifty 50 ETFs provide exposure to economic growth. The choice between the two depends on an investor’s portfolio strategy and risk preference.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Mutual Fund investments in the securities market are subject to market risks, read all the related documents carefully before investing.