India's investment landscape has witnessed a monumental shift as the exchange-traded fund (ETF) market has officially crossed the significant threshold of ₹10 lakh crore in assets under management (AUM). This milestone, highlighted by data from Zerodha Fund House, marks the evolution of ETFs from niche financial instruments to a mainstream investment choice for millions.
From Niche to Mainstream: A Rapid Transformation
The journey to this landmark figure has been remarkably swift. The size of India's ETF market has doubled in just the last three years, signaling a profound change in how Indians invest. Investors are increasingly gravitating towards the transparency, low cost, and ease of access that ETFs provide across various asset classes, including equity, debt, and commodities.
Vaibhav Jalan, Chief Business Officer at Zerodha Fund House, emphasized the appeal of ETFs for newcomers. He stated that ETFs serve as a versatile and simple entry point for exposure to diverse asset classes and market themes, thanks to their cost-effective and transparent structure.
The Role of Gold and Silver ETFs in Diversification
Within this rapidly growing ecosystem, commodity ETFs—specifically those tracking gold and silver—have carved out a vital niche. Gold ETFs were among the first non-equity ETF categories launched in India, playing a pioneering role in educating investors about the ETF mechanism. The later introduction of Silver ETFs further broadened the options for investors seeking commodity exposure without the hassles of physical ownership.
While Zerodha Fund House did not provide a separate AUM breakdown for precious metal ETFs, it confirmed that these products are a key part of the mix, enabling investors to build diversified portfolios that extend beyond traditional equity holdings.
Soaring Participation and Liquidity Fuel Growth
The explosive growth in AUM is underpinned by a dramatic rise in investor accounts and trading activity. Data reveals an astonishing increase in participation: ETF investor accounts skyrocketed from approximately 41 lakh in November 2020 to over 3 crore by November 2025, an eightfold jump in five years. This surge underscores the product's adoption by retail investors alongside institutional players.
Liquidity, a critical factor for any financial market, has also seen exponential improvement. ETF trading volumes leaped from ₹51,000 crore in the financial year 2019-20 to a staggering ₹3.83 lakh crore in FY25. The momentum has continued unabated, with volumes in the first half of FY26 alone crossing ₹3.2 lakh crore, nearly matching the previous full year's total. This enhanced liquidity ensures better price discovery and smoother trade execution for all market participants.
A Mature Market for the Long Term
Vishal Jain, CEO of Zerodha Fund House, hailed the ₹10 lakh crore milestone as a testament to the market's evolution. He noted the satisfaction of witnessing the product category mature after launching India's first ETFs across various segments, including equity, gold, and government divestment.
The fund house pointed out that ETFs are now being utilized not just for long-term, buy-and-hold strategies but also for tactical asset allocation, aided by improved liquidity and tighter tracking of their underlying indices. This growth reflects a broader shift towards passive investing, disciplined asset allocation, and long-term financial planning.
Government initiatives, such as using ETFs for divestment, have also supported this expansion. While equities continue to dominate the ETF AUM, the rising share of debt and commodity ETFs adds crucial balance to the ecosystem. With this newfound scale and maturity, the Indian ETF market is poised to play a central role in portfolio diversification and wealth creation for a generation of investors.
