Gold ETFs AUM triples to Rs 1.7 lakh crore in March amid geopolitical tensions

New Delhi: Physical gold may have taken the lead, but the precious metal has also surged in the digital space, with gold exchange-traded funds (ETFs) emerging as a favourite among both retail and institutional investors as total assets under management (AUM) surged to Rs 1,71,468.4 crore in March 2026, nearly tripling on a year-on-year basis, a report showed on Wednesday.

As per the ICRA Analytics analysis, the AUM figure represents a five-year compound annual growth rate (CAGR) of 64.76 per cent, compared to Rs 14,122.72 crore in March 2021.

On a year-on-year basis, net AUM rose 191.18 per cent from Rs 58,887.99 crore in March 2025, underscoring the accelerating pace of gold-linked investment in India, it said.

Moreover, net inflows into gold ETFs stood at Rs 2,265.68 crore in March 2026, a sharp reversal from net outflows of Rs 77.21 crore recorded in the same period last year. Meanwhile, inflows were a more modest Rs 662.45 crore in March 2021.

However, on a month-on-month basis, inflows moderated significantly and declined by 56.88 per cent from Rs 5,254.95 crore in February 2026 as gold prices underwent a short-term correction and global risk sentiment eased temporarily.

ICRA Analytics Senior Vice President and Head of Market Data, Ashwini Kumar, attributed the surge in investor interest to the dual pull of global uncertainty and strong gold price performance.

“Gold ETFs have seen a clear rise in preference during the recent phase of heightened geopolitical volatility and sharp gold price appreciation, as investors, both retail and institutional, have actively used them as a defensive and tactical allocation within portfolios,” he said.

“This preference has been driven by the dual impact of global uncertainty and strong returns from gold, which reinforced its traditional role as a safe-haven asset,” he added.

Additionally, there are currently 26 gold ETF schemes available in the market, of which six were launched in the financial year 2025-26.

Average one-year returns across most funds range from approximately 58.81 per cent to 62.85 per cent, while five-year CAGR returns range from around 25.78 per cent to 26.11 per cent.

Despite the month-on-month dip in inflows, Ashwini Kumar said investor commitment to the asset class remained structurally intact.

“Even during periods of short-term correction, Gold ETFs retained investor relevance. Although inflows moderated sharply in February and March 2026 due to gold price correction and a temporary easing of global risk aversion, flows nonetheless remained positive, indicating that investor interest had not structurally reversed,” he said.

Ashwini Kumar also drew a distinction between ETF-based and physical gold investments, advocating for the former as a financial instrument.

“Gold ETFs are better suited for investment, portfolio diversification and tactical asset allocation, while physical gold is more appropriate for consumption and long-term holding driven by cultural preference. For most financial investors, Gold ETFs offer a cleaner, more efficient and transparent way to gain exposure to gold prices,” he said.

IANS