Gold, silver ETFs may soon rival top equity funds in assets on sharp rally

Gold and Silver ETFs Set to Rival Largest Equity Mutual Funds

The prices of gold and silver continue to rise, setting new records on a regular basis, and the assets under management (AUM) of Exchange Traded Funds (ETFs) that invest in these precious metals could potentially rival the largest equity mutual funds (MFs) soon.

Top Gold and Silver ETFs in India

• Nippon India MF: ₹102,516.5 crore (combined AUM of gold and silver ETFs)
• ICICI Prudential MF: ₹48,165.7 crore (combined AUM of gold and silver ETFs)
• Nippon India Gold ETF: ₹55,125 crore (largest in the category)
• Nippon India Silver ETF: ₹47,392 crore
• ICICI Prudential MF’s Gold ETF: ₹24,587 crore
• ICICI Prudential MF’s Silver ETF: ₹23,579 crore

Flexi-Cap Equity Funds Still Lead in AUM

Flexi-cap equity funds currently hold the largest AUM in the MF space, with Parag Parikh Flexi Cap at ₹1.33 lakh crore and HDFC Flexi Cap Fund at ₹96,285 crore.

Record Inflows in Gold ETFs

In December, gold ETFs recorded net inflows of ₹11,647 crore, according to Association of Mutual Funds in India (AMFI) data.

Why Investors Prefer Gold and Silver ETFs

• True Safe Haven: Investors view precious metals as a true safe haven and an effective hedge against volatility.
• Transparent and Regulated Channel: The gold-ETF route is increasingly preferred as a transparent, regulated channel to gain exposure to gold.
• Store of Value: Precious metals like gold and silver have historically served as stores of value and have acted as hedges against inflation and currency depreciation.
• Central Bank Demand: Central banks globally increasing their gold reserves and silver demand rising across industrial and investment segments have prompted the growth of ETFs that invest in these metals.

Experts Weigh in on Gold and Silver ETFs

Nippon India MF said, "The strong growth in gold and silver ETF assets reflects investors’ increasing preference for transparent, liquid, and regulated investment avenues to gain exposure to precious metals."

Experts added, "Looking ahead, as structural trends like currency pressure, inflation risks and global instability persist, gold ETFs are likely to become an important component of many portfolios as part of overall portfolio diversification."