Gold and Silver ETFs Drive Surge in India’s Passive Fund AUM — But Can the Momentum Last?

Gold and Silver ETFs Propel India’s Passive Fund AUM to New Highs — But Can the Rally Sustain?

India’s passive mutual fund universe continued its remarkable momentum in October, with the segment’s asset under management (AUM) rising 5.2 percent month-on-month to ₹13.66 lakh crore, according to the latest AMFI data. The surge was led by strong inflows into Gold ETFs, Silver ETFs, equity index funds, and other exchange-traded products — reinforcing the growing investor preference for low-cost, diversified and commodity-backed instruments.

The month also witnessed a sharp expansion in passive investor accounts, or folios, which climbed from 4.46 crore in September to 4.82 crore in October, marking an 8 percent month-on-month rise. Much of this jump came from Gold ETFs and Other ETFs, which together added over 20 lakh new investor accounts. Alone, Gold ETF folios surged 11 percent in a single month, crossing the 95 lakh mark for the first time.

This aggressive rise in passive fund AUM, driven largely by gold and silver allocations, has prompted experts to evaluate whether the sudden acceleration represents a structural shift or a sentiment-led spurt tied to geopolitical uncertainty and multi-year rallies in global precious metals.

Gold and Silver ETFs Lead the Passive Surge Amid Record Commodity Rallies

As per DSP Asset Managers’ latest Passive Product Deck, commodities — especially Silver ETFs — are currently the fastest-growing category within the passive investing landscape. Silver ETFs have reported an extraordinary 180% CAGR, while Gold ETFs have grown at 61% CAGR, supported by a global pivot towards safe-haven assets in 2025.

During the ongoing calendar year, silver prices surged 65% and gold rallied 51%, significantly outperforming India’s benchmark equity indices which rose just 2 percent. This price action translated into massive flows into commodity-backed ETFs.

As a result, the combined commodity ETF corpus rose to nearly ₹90,000 crore, with Silver ETFs accounting for roughly ₹12,000 crore of this total. Gold ETFs have now surpassed the ₹1 lakh crore AUM threshold, drawing inflows of ₹7,743 crore in October — only slightly lower than September’s record ₹8,363 crore.

Market analysts say the surge in passive fund AUM underscores investors’ growing inclination toward gold and silver as hedges against inflation, geopolitical risks and global interest rate uncertainty.

Also Read : Metal Stocks Rise Up to 3% as Hind Zinc, Tata Steel Lead Gains; Vietnam Duty Among Key Drivers

AMC Leaders Acknowledge Strong Growth — But Warn of Speculative Spurt

According to Anil Ghelani, Head of Passive Investments at DSP Mutual Fund, passive investing in India remains structurally strong, with consistent additions from new investors and diversification-driven flows from existing ones. However, he also cautions that the sudden spike in commodity ETF inflows may not be fully sustainable.

“Over the past couple of months, the surge in demand for Gold ETFs and Silver ETFs appears partly speculative. The broad trend over one to two years has been stable and structural, which is healthy — but recent momentum may cool off,” Ghelani said.

He also noted that while active equity inflows fell 19 percent month-on-month, investors are not abandoning active funds. SIP flows hit an all-time high of ₹29,500 crore, and rising allocations into Multi Asset Allocation Funds indicate that some equity flows may be shifting between categories rather than exiting.

Index Funds and Other ETFs Maintain Core Dominance of Passive Universe

Despite the spotlight on commodities, equity-linked instruments remain the backbone of India’s passive mutual fund segment. Other ETFs, including equity, sectoral and thematic ETFs (as well as silver ETFs), hold the largest share of ₹9.08 lakh crore, up 5 percent from September.

Index funds, too, saw healthy inflows, with AUM rising to ₹3.20 lakh crore, driven by a strong 22 percent jump in investor contributions. Low-cost access to benchmark Nifty and Sensex indices continues to fuel interest in index investing.

Investors have shown a clear preference for passives as a core portfolio allocation, particularly as global macro volatility raises questions about active fund outperformance.

Retail Participation Expands at Record Pace

October marked one of the strongest months for retail participation in passive products. The addition of 36 lakh new folios — most of them in commodity and equity ETFs — underlines the increasing comfort among small investors with digital investing and index-based strategies.

Passive accounts now form over one-fifth of India’s total mutual fund folios, signalling a decisive behavioural shift as investors embrace simplicity and transparency over high-cost active bets.

Performance Drives Sentiment: Silver and Gold ETFs Top Charts

Performance trends also help explain the flow dynamics. Over the past year:

• Gold ETFs returned ~59%, led by HDFC Gold ETF (59.41%), SBI Gold ETF (59.17%), and Nippon India Gold BeES (59.06%).

• Silver ETFs returned 66–68%, with ICICI Prudential Silver ETF (67.20%) and HDFC Silver ETF (67.21%) topping the list.

With central banks—including the RBI, which holds 880 tonnes of gold reserves—continuing to accumulate gold, analysts see structural support for bullion-backed ETFs even if near-term volatility persists.

Can the Passive Fund AUM Momentum Sustain?

While India’s passive fund AUM continues to scale new highs, experts believe the next phase of growth will depend on:

• Whether gold and silver continue their historic rally

• The pace of Federal Reserve rate cuts

• Stability in global markets

• Long-term adoption of index and ETF investing among Indian households

If broader market conditions remain supportive, fund managers expect passive AUM to continue expanding, albeit at a more balanced and measured pace compared to October’s exceptional surge.

• Gold
• Silver
• Nifty 50
• Bank Nifty
• Sensex