Bandhan Gold ETF FOF: Invest in the increasing glitter of the yellow metal

Investors are always looking for secure and dependable assets to protect their wealth. With the consequences of geopolitical tensions, inflationary pressures, economic slowdown and shifting monetary policies, the value of Gold has seen phenomenal growth and its importance in investment portfolios cannot be over emphasized. In this article, we will review the Bandhan Gold ETF FOF which was just launched in January 2026.

Why invest in Gold ETF FOF?

Historically, Gold had been considered to be store of economic value for generations. Its fascination stems not only from its outward beauty, but also from its longevity and scarcity as a natural resource. Gold is widely regarded as a safe haven asset during economic downturns. Historically, it has demonstrated an ability to preserve purchasing power across varying economic cycles. However, traditionally gold is predominantly purchased in the form of jewellery or coins, which may not represent the most efficient investment avenues. As a result, financial advisors increasingly recommend holding gold as a financial asset for investment purpose.

Over sufficiently long investment horizons Gold retains its purchasing power. However, traditionally gold has been bought as jewellery and coins which is not an ideal investment avenue. Investment experts recommend Gold as a financial asset for investment purposes.

Instead of buying physical bullion-which involves storage costs and purity risks-investors can opt for investment into Gold ETF FOF which invest in Gold ETFs. A Gold ETF is an exchange-traded fund tracking domestic gold prices. They are passive investment instruments that are based on gold prices and invest in gold bullion. The gold invested in is 99.5% pure gold as per SEBI's requirements. Gold Fund of funds invest in Gold ETFs and come with transparent pricing, no making charges and the ease of investing through SIPs. Gold Fund of funds provide a cost-efficient, transparent, and convenient way to gain exposure to precious metals without opening a demat or trading account. The Gold FOFs offer a convenient option for investors who want to invest through SIPs and STPs and are easy to buy or redeem like any mutual fund. Bandhan Gold ETF FOF is a low-cost option for investing in Gold as an asset class.

Why invest in gold?

• Asset class performance keeps changing: A fundamental principle of investing is diversification avoiding excessive concentration in a single asset class. A well-constructed portfolio should include a balanced mix of assets to help manage volatility, particularly during periods of equity market uncertainty. Gold, which has historically exhibited a low or negative correlation with equities, can provide meaningful diversification benefits within a portfolio.
  
  

  

  Source: NSE, MCX, Advisorkhoj Research, as on 31^st December 2025. Equity is represented by Nifty 50 TRI, Debt by Nifty 10 year Benchmark G-Sec Index, and Gold by MCX Spot prices.



• Historical data shows that gold often has a low or negative correlation with equities, giving it a safe-haven characteristic. This property can help mitigate portfolio drawdowns, particularly during periods of market stress or financial crises.
  
  

  

  Source: Bloomberg. Data till 9^th Dec. 2025. Nifty - Nifty 50 Index TRI; Debt - Crisil Short Term Bond Index; Gold -Domestic Prices of Gold (MCX India Gold Spot Index - 10gms). Rolling Returns calculated on daily basis. Correlation has been calculated from 1^st Jan 2006 till 9^th Dec 2025



• Unlike copper or palladium, gold’s value is not tied to a single industry.


• Drawdowns: In 20 out of 26 years (see chart below) gold had lower drawdown as compared to equity. Note that there were no drawdowns for equity or gold in the year 2012.
  
  

  

  Source: Bloomberg. AMFI India Data from 3^rd Jan 2000 to 30^th Nov 2025.



• Improve portfolio risk adjusted returns: The charts below show the median and standard deviation of rolling returns for different tenures over the last 20 years. You can see that gold can provide superior risk / return trade-off compared to equities in the short to medium term. Also represented is the comparison between a pure equity or pure gold portfolio Vs a portfolio consisting gold in 80:20 ratio. The ratio of gold could be adjusted as per the risk profile.
  
  

  

  Source: MCX spot prices, NSE, Advisorkhoj Research, as on 31^st December 2025

Why has Gold Endured Across Market Cycles and is a Must in investor portfolios?

India remains one of the largest consumers of gold worldwide. As household incomes rise, the appetite for precious metals only grows stronger. Gold is a time-tested store of value. When inflation erodes the purchasing power of money, gold often shines. Historically, gold has delivered robust long-term appreciation while maintaining stability, when traditional assets like stocks or bonds face turbulence.

• Gold's long-term growth: Over the past 20 years, gold has multiplied many times over, consistently beating inflation. Gold prices surged nearly 17X from about Rs 7,400 per 10 grams in Nov 2005 to Rs 1.32 lakh per 10 grams in Dec 2025.


• Gold also acts as safe-haven asset, performing strongly during financial uncertainty. The limited supply of the precious metal coupled with the global demand makes it an ideal component of a balanced investment portfolio. Uncertainty is a constant - gold may hold value in such moments.
  
  

  

  Source: Advisorkhoj Research



• Currency fluctuations are an ongoing feature of global markets. Historically, gold has shown an inverse relationship with the U.S. dollar, often strengthening when the dollar weakens. Consequently, gold may help hedge currency risk and support portfolio stability during periods of dollar depreciation.

Why is now a good time to invest in gold?

1. Global Conflict: Geo-political conflicts e.g. US military actions in Venezuela, instability in the Middle East etc drive investors toward safe-haven assets like gold. The freezing of Russian reserves and rising global conflicts are pushing gold as a neutral store of value, accelerated by de-dollarisation and the fear of currency debasement.


2. Global Central Bank Buying: Central banks worldwide have been increasing their gold reserves. For the first time since 1996, central banks now hold more gold than U.S. Treasury securities, signalling a significant shift in global reserve strategies. Central banks have been acquiring over 1,000 metric tons of gold annually, doubling the average of the previous decade.
   
   

   

   Source: World Gold Council. Data as on 30^th June 2025.



3. Falling Interest Rates: Lower global interest rates often support higher gold prices, as investors seek alternatives to low-yield assets.


4. Currency depreciation: Weakening rupee often prompts investors to purchase gold as a protective asset or safe haven and a hedge against currency fluctuations.


5. Rising U.S. Debt to GDP Ratio: Rising US debt to GDP ratio creates demand for gold as safe haven asset


6. Correction in gold prices: Gold prices have corrected from its peak (see chart below) and now seems to be in the consolidation phase.
   
   

   

   Source: MCX. Data as on 16^th February 2026

The Bandhan Gold ETF FOF

The investment objective of the fund managers of Bandhan Gold ETF FOF is to generate long-term capital appreciation from a portfolio created by investing in the domestic price of gold ETFs. The fund is managed by Mr. Abhishek Jain.

Who Should Invest in Bandhan Gold ETF FOF?

• Investors seeking portfolio diversification and stability.


• Those looking for inflation protection and wealth preservation.


• Individuals with long-term investment horizons.


• Investors who prefer digital, low-cost alternatives to physical gold.

Consult a mutual fund distributor or a financial advisor to help you determine your financial goals, risk tolerance, and investment horizon and find out if the Bandhan Gold ETF FOF is suitable for your financial goals.