A major milestone has been achieved in India’s financial sector. Arth Bharat Investment Managers IFSC LLP has launched the Arth Bharat FinMet Physical Gold Fund in GIFT City, Gujarat.
This is not only GIFT City’s first physical commodity fund but also its first-ever physical gold fund.
The launch comes after the International Financial Services Centres Authority (IFSCA) officially recognized commodity trading as a financial product under the IFSCA Act from January 2026.
This move is expected to boost GIFT City’s position as a leading international financial hub.
A New Investment Option Backed by Physical Gold
The Arth Bharat FinMet Physical Gold Fund is an open-ended, passively managed fund launched in partnership with Singapore-based precious metals specialist FinMet.
The fund aims to closely track international gold prices with minimal tracking error.
To achieve this, at least 95% of the fund’s assets will be invested in LBMA-approved physical gold bars traded through the India International Bullion Exchange (IIBX) in GIFT City.
IIBX is jointly promoted by major Indian financial institutions, including NSE, NSDL, CDSL, MCX, and a subsidiary of BSE.
Weekly Investment and Withdrawal Facility
One of the biggest advantages of this fund is its flexibility.
Investors can invest and redeem their money on a weekly basis, providing better liquidity than most physical commodity-based investment products.
The fund’s total expense ratio (TER) is also relatively low at just 0.65% per year, making it a competitive investment option.
Investors Can Even Receive Physical Gold
According to Arth Bharat Managing Partner Sachin Savrikar, the fund will invest in physical gold stored in insured and IFSCA-regulated vaults operated by India International Depository IFSC (IIDI) in GIFT City.
A unique feature of this fund is its redemption option. Investors can choose either:
Certified physical gold bars, or
The cash value of their investment
This provides flexibility rarely seen in traditional gold investment products.
Why Does Arth Bharat Believe Gold Is Attractive Now?
The company believes that gold prices are currently around 28% below their record highs seen in January, creating an attractive opportunity for medium and long-term investors.
India remains one of the world’s largest consumers of gold, and many Indian families have traditionally considered gold a reliable store of wealth during uncertain times.
Gold Has Delivered Strong Returns
Gold has generated solid returns over different investment periods:
Around 13.7% annual returns over the past 10 years
Around 20.4% annual returns over the last 5 years
Approximately 20% returns in the last one year ending June 30, 2026
According to Arth Bharat, these figures highlight gold’s long-term investment potential.
Three Reasons Why Gold Remains Important
Sachin Savrikar highlighted three major advantages of investing in gold:
1. Low Correlation with Stocks
Gold generally moves independently of stock markets. Its correlation with the S&P 500 index is only around 0.02.
2. No Counterparty Risk
Unlike financial assets, gold does not depend on the financial strength of any institution, government, or country.
3. Strong Long-Term Performance
Since 2001, gold has delivered an average annual return of around 12.1%, outperforming many traditional investment options.
He also pointed out that during the market turmoil of 2022, gold remained resilient even when both stocks and bonds declined simultaneously.
A Big Boost for India’s Gold Trading Ecosystem
The launch of this fund could significantly strengthen India’s gold market infrastructure.
The India International Bullion Exchange (IIBX), launched in GIFT City in 2022, has struggled to attract consistent institutional participation.
While trading volumes increased from 411 kg in FY23 to 92 tonnes in FY25, volumes fell sharply to around 600 kg in FY26.
Until now, most trading activity on IIBX has been driven by jewelers importing gold.
The Arth Bharat FinMet Physical Gold Fund will become the first institutional investment fund to hold physical gold through IIBX, potentially attracting more institutional investors and creating a new source of long-term demand.
A Step Toward Making GIFT City a Global Gold Finance Hub
According to Arth Bharat, this fund is more than just another gold investment product.
The company believes that institutional participation through this fund can encourage other fund managers, family offices, and large investors to enter the market.
This could help transform GIFT City from a gold import center into a global hub for gold finance and investment.
