Gold ETFs attract Rs 2,080 cr in June, highest in 5 months on bullion price rally

Gold exchange-traded funds (ETFs) in India experienced a notable surge in investor activity in June 2025, achieving their highest net inflow in five months. According to data from the Association of Mutual Funds in India (AMFI), these funds attracted Rs 2,080 crore, a significant increase from the ₹292 crore recorded in May. This upsurge reflects growing investor interest amidst near record-high domestic bullion prices.

Gold ETFs are popular among investors due to their structure as passive investment tools that track gold prices, providing a convenient way to invest in the precious metal without the need for physical storage. The net assets under management (AUM) for these funds reached a record ₹64,777 crore last month, reflecting a substantial 53% year-on-year growth. This growth is influenced by the appreciation in bullion prices, which also impacted gold spot prices on the Multi Commodity Exchange.

"In the passive category, gold ETFs recorded strong inflows with a 7 times MOM surge, reflecting investor interest in gold as due to global uncertainty and the spike also comes amid the absence of Sovereign Gold Bond issuances over the past year, prompting investors to turn to gold ETFs as an alternative exposure route. In contrast, equity index funds and ETFs witnessed net outflows, indicating a shift in sentiment away from passive equity strategies, possibly driven by short-term market volatility," said Feroze Azeez, Joint CEO, Anand Rathi Wealth Limited.

Nehal Meshram, Senior Analyst at Morningstar Investment Research India, stated, "The robust inflows in June indicate a decisive shift in sentiment, likely supported by resilient gold prices, geopolitical uncertainties, and volatility in equity and fixed income markets, which have revived gold’s appeal as a safe-haven asset."

In addition to gold, silver ETFs also saw substantial net inflows, exceeding ₹2,000 crore in June, further emphasising the attractiveness of precious metals during periods of market volatility. With over 20 bullion ETFs available, including major ones like Nippon India ETF Gold BeES, the sector offers diverse options for investors seeking to hedge against market risks.

Venkat Chalasani, chief executive of AMFI, commented on the phenomenon, "This is a safe haven moment and people did try to book profits. In June, we have seen more inflows and positive inflows with lower redemptions." This observation suggests that investors are maintaining their positions in gold ETFs, viewing them as a stable store of value amidst uncertain market conditions.

Top-performing gold ETFs have delivered strong returns, with notable growth in funds such as LIC MF Gold ETF and UTI Gold ETF over the past five years. Investment strategies in these ETFs have yielded significant returns, reinforcing gold's reputation as a reliable investment.

Investing Rs 10,000 monthly in gold ETFs over the past five years has delivered strong returns across funds. LIC MF Gold ETF led the pack, growing a Rs 6 lakh investment into Rs 9.93 lakh with an XIRR of 20.93%. UTI Gold ETF followed closely, turning the same SIP into Rs 9.92 lakh at 20.87% XIRR.

Invesco India Gold ETF grew to Rs 9.91 lakh (20.83% XIRR), while Axis Gold ETF and ICICI Prudential Gold ETF each reached Rs 9.90 lakh, with XIRRs of 20.79% and 20.77%, respectively.

Aditya Birla SL, HDFC, and Kotak Gold ETFs all grew SIPs to Rs 9.88 lakh, with XIRRs around 20.70%. SBI Gold ETF yielded Rs 9.86 lakh at 20.59%.

Quantum Gold Fund ETF ended at Rs 9.84 lakh, while Nippon India ETF Gold BeES, the largest by assets, grew the SIP to Rs 9.83 lakh, delivering a 20.50% XIRR and managing Rs 20,836 crore as of May 2025.

The substantial inflows into both gold and silver ETFs highlight the enduring appeal of these assets as stable stores of value. As geopolitical uncertainties persist and market volatility influences investor behaviour, precious metals remain a preferred choice for hedging and portfolio diversification.

Given the current market dynamics, the trend of increasing inflows into gold ETFs is poised to continue, reflecting a broader interest in safe-haven assets in light of ongoing economic and geopolitical factors.