NEW DELHI, Feb 10: Gold exchange-traded funds (ETFs) recorded a sharp surge in inflows in January, attracting Rs 24,040 crore — more than double from Rs 11,647 crore in the preceding month — as yellow metal prices climbed amid rising geopolitical risks.
For the first time, inflows into gold ETFs marginally surpassed those into equity mutual funds, which saw investments of Rs 24,028.6 crore during the month, according to data released by Association of Mutual Funds in India (Amfi) on Tuesday.
The record inflows in gold ETFs in January was “driven by the superior one-year performance of gold and silver relative to other major asset classes”, said Umesh Sharma, CIO Debt, The Wealth Company Mutual Fund.
According to Varun Gupta, CEO of Groww Mutual Fund, the strong inflows reflect the increasing financialisation of gold as an investment asset.
The trend highlights a shift in investor behaviour, with gold increasingly being viewed as a core portfolio component rather than a tactical allocation.
Investor appetite for gold remained robust, driven by its appeal as a safe-haven and diversification tool, said Nehal Meshram, Senior Analyst at Morningstar Investment Research India.
“Part of the strength likely reflects fresh allocations at the start of the year, as investors rebalance portfolios and add hedges after a volatile period across risk assets. Gold ETFs continue to benefit from their positioning as a regulated, liquid, and cost-efficient way to hold gold versus physical formats, making them an easy ‘add-on’ allocation during uncertain macro phases,” Meshram added.
With latest additions, total inflows into gold ETFs have reached around Rs 61,000 crore in the current financial year.
The recent rally in gold and silver prices has also led to a sharp rise in demand for gold and silver ETFs, as investors look for diversified avenues to gain exposure to precious metals.
However, equities continue to remain the preferred asset class for long-term wealth creation, said A Balasubramanian, Managing Director and CEO of Aditya Birla Sun Life AMC.
Gold prices touched a lifetime high last month, with the metal scaling Rs 1.8 lakh per 10 grams.
Reflecting the sustained inflows, assets under management (AUM) of gold ETFs rose to Rs 1.84 lakh crore at the end of January, from Rs 1.28 lakh crore a year earlier.
Measured allocations to gold and silver ETFs indicate a balanced approach by investors toward diversification and portfolio stability, said AMFI CEO Venkat N Chalasani.
Apart from gold ETFs, other ETFs, including thematic and index-linked products, also witnessed higher participation, attracting Rs 15,006 crore last month compared to Rs 13,199 crore in December. (PTI)
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