Exchange-traded funds (ETFs) in India witnessed unprecedented inflows of Rs 1.8 lakh crore in the financial year 2025-26 (FY26), driven by a surge in investments in gold and silver ETFs, as per a report released on Tuesday.
Record Inflows Across ETF Categories
The total inflows into ETFs more than doubled compared to the previous fiscal year, with gold and silver ETFs accounting for a significant portion. The report highlighted that investors increasingly turned to precious metal ETFs as a hedge against market volatility and inflationary pressures.
Gold ETFs Lead the Charge
Gold ETFs alone attracted over Rs 1.1 lakh crore, marking a sharp increase from Rs 45,000 crore in FY25. The rally in gold prices, which hit multiple all-time highs during the year, fueled investor appetite. Silver ETFs also saw robust inflows of Rs 35,000 crore, up from Rs 12,000 crore in the prior year.
Equity ETFs See Moderate Growth
While equity-linked ETFs also recorded gains, their growth was more subdued. Inflows into equity ETFs stood at Rs 35,000 crore, compared to Rs 28,000 crore in FY25. The report attributed this to a shift in investor preference toward safer assets amid global economic uncertainties.
Factors Driving the Surge
Several factors contributed to the record ETF inflows, including:
- Geopolitical tensions and trade disruptions, which boosted demand for safe-haven assets like gold and silver.
- Central bank purchases of gold, which reinforced positive sentiment.
- Retail investor participation, aided by easy access through mobile trading apps and lower expense ratios of ETFs.
- Inflation concerns, prompting investors to seek assets that preserve value.
Outlook for FY27
Market experts expect ETF inflows to remain strong in FY27, though the pace may moderate. The report suggested that continued interest in precious metals, along with potential rate cuts by the Reserve Bank of India, could sustain momentum. However, any sharp correction in gold prices or improved risk appetite for equities might shift flows.
Overall, the record ETF inflows underscore the growing maturity of India's capital markets and the increasing preference for diversified, low-cost investment vehicles among domestic investors.
