Best Gold ETFs in May 2026: LIC MF Gold ETF, Invesco India Gold ETF and More Based on Tracking Error

Gold Exchange-Traded Funds (ETFs) are investment instruments that seek to replicate the performance of domestic gold prices by investing in physical gold or related assets. As these funds are traded on stock exchanges, they provide investors with exposure to gold without the need for physical storage or concerns around purity.

Tracking error remains an important metric when evaluating gold ETFs. It reflects how closely a fund’s performance aligns with its benchmark, typically the domestic price of gold. Lower tracking error indicates closer alignment, although it may vary based on fund structure and costs. 

Below is a snapshot of select gold ETFs and their tracking error as of May 2026.

Gold ETFs with Tracking Error – May 2026

Overview of Gold ETFs

1. LIC MF Gold ETF

LIC MF Gold ETF invests in gold-related assets to reflect domestic gold price movements. It provides a listed route for investors seeking exposure to gold.

Key Metrics

• 5yr CAGR: 25.19%
• 1yr Return: 53.84%

2. Invesco India Gold ETF

This ETF aims to track gold prices through investments in physical gold and related instruments.

Key Metrics

• 5yr CAGR: 24.79%
• 1yr Return: 53.91%

3. Axis Gold ETF

Axis Gold ETF is structured to mirror the performance of gold prices while offering liquidity through exchange trading.

Key Metrics

• 5yr CAGR: 24.72%
• 1yr Return: 53.8%

4. SBI Gold ETF

SBI Gold ETF invests primarily in gold bullion to align its returns with domestic gold price movements.

Key Metrics

• 5yr CAGR: 24.74%
• 1yr Return: 53.21%

5. Kotak Gold ETF

Kotak Gold ETF is an open-ended scheme that seeks to track the price of gold through investments in physical gold.

Key Metrics

• 5yr CAGR: 24.55%
• 1yr Return: 54.28%

Gold ETFs 6-Month Returns Snapshot

How to Evaluate Gold ETFs?

When reviewing gold ETFs, investors may consider the following factors:

• Tracking Error: Indicates how closely the ETF follows gold prices
• Expense Ratio: Lower costs may help reduce deviation over time
• Liquidity: Higher trading volumes can support smoother transactions
• AUM (Assets Under Management): Larger funds may benefit from operational efficiencies

Read More: These 3 equity mutual fund categories offer over 15% average return in 1 year. Check details.

Conclusion

Gold ETFs provide a structured way to gain exposure to gold through market-linked instruments. Tracking error, along with cost and liquidity factors, plays a role in evaluating fund performance. As market conditions and fund metrics may change, periodic review of these parameters can support informed decision-making.

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 or 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.