Gold Or Silver ETF: What ₹5 Lakh Invested In Each Reveals About 3-year Performance

Precious metal exchange-traded funds (ETFs) have become increasingly popular in India as investors seek safer, demat-based alternatives to physical gold and silver. Over the past three years, both gold and silver ETFs have delivered compelling returns. But which one outperformed? According to financial experts, while both serve as effective hedges against inflation and portfolio volatility, their returns and risk characteristics differ. Let’s explore how a ₹5 lakh investment in each would have grown and which asset class demonstrated stronger performance.

Understanding Gold and Silver ETFs

Gold and silver ETFs are mutual fund schemes that track the domestic price of high-purity gold or silver, respectively. These are passive funds, requiring minimal management, and are traded on stock exchanges just like equity shares. Investors need a demat account to buy or sell them during market hours.

These ETFs don’t involve the risks of physical storage and provide transparent, market-linked pricing. Typically, the net asset value (NAV) of each ETF unit is directly related to the prevailing price of the underlying metal. For Indian investors looking for long-term exposure to precious metals, ETFs offer a convenient, cost-effective route.

Performance Snapshot: Gold ETF Over 3 Years

Among the various gold ETFs available in India, one fund stood out with an impressive annualised return of 24.61% over the past three years. With an asset base of ₹1,968 crore, this fund has consistently mirrored gold’s upward trajectory, providing robust returns to its unit holders. As of 21 July 2025, the NAV stood at ₹83.1597, indicating strong value appreciation.

Since its inception in March 2007, this gold ETF has delivered an annualised return of 12.60%, making it a reliable long-term holding. The fund’s expense ratio is 0.48%, and the minimum investment requirement is ₹20,000.

According to market experts, gold’s status as a safe-haven asset often attracts investor attention during global uncertainty or inflationary phases, which contributed to its recent strong performance.

Silver ETF Performance Over 3 Years

Silver, often seen as gold’s undervalued cousin, has outpaced gold in terms of recent performance. The top silver ETF in India delivered an annualised return of 27.63% over three years, outshining its gold counterpart. With a relatively smaller asset under management of ₹820 crore, the fund’s NAV on 21 July 2025 stood at ₹113.9445.

Launched in January 2022, this silver ETF is benchmarked against the domestic silver price. It boasts a lower expense ratio of 0.35%, with a minimum investment amount starting at just ₹500, making it accessible to retail investors.

Experts point out that silver’s dual industrial and investment demand has driven its rapid price appreciation, especially in an environment of expanding renewable energy and electronics industries.

How ₹5 Lakh Investment Grew In Each ETF

To assess practical performance, let’s take a hypothetical investment of ₹5 lakh in both the top-performing gold and silver ETFs three years ago.

• In the gold ETF, the investment would have grown to ₹9,67,450, reflecting the 24.61% annualised return.
  
  
  
• In the silver ETF, the same investment would now be worth ₹10,39,509, thanks to its higher 27.63% return.
  
  
  

Though the difference in corpus may seem moderate at a glance, over a longer horizon, such performance gaps could widen significantly, especially with reinvestments or systematic investment plans.

Which ETF Should You Choose?

Gold and silver ETFs are not direct substitutes. While gold has historically been a safe-haven asset, silver brings both investment and industrial value. Your choice should depend on your financial goals, time horizon, and risk tolerance.

According to financial advisors, those seeking stability and inflation protection may prefer gold ETFs, while investors with a slightly higher risk appetite and longer horizon may explore silver ETFs for potentially higher returns.

Diversification also plays a key role — a blend of both could help in balancing risk and return in a precious metal-focused investment strategy.

Final Word: ETFs As Efficient Wealth Builders

Precious metal ETFs have shown the potential to create significant wealth in just three years, with silver edging past gold in terms of returns. Investors looking for alternatives to physical gold or silver may find ETFs ideal due to their transparency, liquidity, and storage-free nature. However, experts advise viewing these as long-term investments rather than short-term trades.

Disclaimer: This article is for informational purposes only. Investment decisions should be made after consulting certified financial advisors. All data mentioned is based on publicly available performance metrics and expert insights as of July 2025.