Indian investors are increasingly turning to precious metals through exchange-traded funds (ETFs), with gold and silver ETFs collectively attracting more capital than equity ETFs in the fiscal year 2026. This marks a notable shift in passive-investing preferences, highlighting a growing appetite for diversification beyond traditional stock market exposure.
Precious Metals Lead ETF Inflows in FY26
Data from the CRISIL-AMFI Factbook 2026 and an analysis of AMFI data by Zerodha Fund House reveal that passive funds received a substantial ₹1.81 lakh crore in net inflows during FY26. Commodity ETFs, specifically gold and silver, were a primary driver of this surge, fueled by elevated global uncertainty and a rally in precious metal prices.
- Gold ETFs: Attracted ₹68,868 crore, more than doubling their cumulative inflows from FY21-FY25.
- Silver ETFs: Drew ₹30,412 crore, a sharp rise attributed to price rallies, industrial demand, and safe-haven buying.
- Combined Gold & Silver ETFs: Totaled ₹99,280 crore, accounting for approximately 55% of all ETF inflows.
- Equity ETFs: Received ₹77,780 crore, making up about 43% of total ETF inflows, though remaining the single largest individual ETF category.
The assets under management (AUM) for gold ETFs nearly tripled, rising from ₹59,000 crore in March 2025 to ₹1.71 lakh crore in March 2026—a 191% increase. This growth reflects both fresh investor capital and rising gold prices, solidifying gold's role as a portfolio diversification instrument.
Rethinking Portfolio Diversification
The significant inflows into gold and silver ETFs suggest that investors are utilizing ETFs for more than just equity exposure. Precious metals are increasingly viewed as tools for portfolio diversification, particularly during periods of high market uncertainty when correlations between different asset classes become crucial.
However, this trend does not necessarily signal a need to replace equity allocations with commodities. While precious metals offer diversification benefits, their prices can be volatile and are influenced by factors distinct from corporate earnings. The key takeaway for investors is to ensure a balanced portfolio with an appropriate mix of asset classes that aligns with their risk profile and investment horizon. The FY26 ETF flow data underscores a growing recognition among Indian investors that diversification can effectively extend beyond just stocks and bonds to include commodities.