Gold vs Silver: Which Precious Metal Should You Add to Your Portfolio? ETF vs Mutual Fund vs Multi-Asset Fund

Gold and silver prices have risen significantly in recent months, drawing strong interest from retail investors. With the surge in prices, many are now exploring the mutual fund route to accumulate these precious metals. According to a report by The Economic Times, mutual funds offer an accessible, efficient way to invest in gold and silver without dealing with the challenges of buying physical bullion.

Gold vs Silver: Which Precious Metal Should You Add to Your Portfolio?

Gold has traditionally been viewed as a portfolio diversifier and a hedge against inflation. Its value tends to hold up during economic downturns, making it a stable asset in times of uncertainty. Silver, on the other hand, serves both as a precious and industrial metal. In addition to its use in jewellery and coins, it plays a vital role in sectors like electronics, photography, and solar energy - adding a different dimension to its investment appeal.

Financial advisors generally suggest allocating around 10-15% of one's investment portfolio to gold and silver, depending on individual risk tolerance and financial goals. Instead of investing a lump sum, experts recommend using systematic investment plans (SIPs) to stagger purchases. This strategy helps spread out risk over time and minimises the impact of short-term price volatility.

ETF vs Mutual Fund vs Multi-Asset Fund: What's the Best Way to Buy Gold or Silver?

One of the key advantages of investing in gold or silver through mutual funds is the convenience they offer. Investors don't have to worry about storage issues, security risks, purity concerns, or making charges - all common challenges when buying physical metal. Mutual funds and exchange-traded funds (ETFs) offer exposure to precious metals with ease, transparency, and low cost. They also make it simple to track market prices without needing to physically hold the asset.

Investors have multiple fund options to choose from. Those with demat accounts can invest directly in gold or silver ETFs. For those without demat accounts or who find trading cumbersome, fund-of-fund (FoF) schemes are a good alternative. These funds invest in gold or silver ETFs and can be purchased like any regular mutual fund. Multi-asset funds that include gold as part of a broader portfolio are also becoming popular, offering built-in diversification.

As of 31 May 2025, there are 20 gold ETFs in the market, managing total assets of Rs 62,124 crore. In comparison, silver ETFs - though fewer in number - are gaining traction, with 15 funds collectively managing Rs 15,500 crore. The growing number of schemes highlights increasing interest from retail and institutional investors alike.

In terms of returns, precious metal funds have delivered strong performance. Over the last one year, gold mutual funds have returned an impressive 30.89%, while silver funds have delivered 15.18%. Looking at a longer horizon, gold funds returned 22.05% over three years, with silver funds yielding 18.29%. These returns underline the potential of gold and silver to generate meaningful long-term gains, especially when held as part of a well-diversified portfolio.

Gold and silver remain powerful tools in an investor's arsenal. With the convenience, safety, and accessibility offered by mutual funds and ETFs, retail investors now have smarter, more flexible ways to include precious metals in their financial planning without needing to buy physical bullion. As prices continue to move and global uncertainty lingers, gold and silver could continue to play a stabilising role in your investment portfolio.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.