India’s exchange-traded fund (ETF) market witnessed a record-breaking year in FY26, with total net inflows crossing ₹1.81 lakh crore, according to a study by Zerodha Fund House based on AMFI data. A standout trend was the surge in gold ETFs, where assets under management (AUM) rose sharply from about ₹59,000 crore in March 2025 to over ₹1.71 lakh crore by March 2026 — a 191% increase, underscoring strong investor demand amid global uncertainty.

Commodity ETFs

In a notable shift, commodity ETFs—comprising gold and silver—attracted more inflows than equity ETFs for the first time. Gold and silver ETFs together saw net inflows of ₹99,280 crore, accounting for nearly 55% of total ETF inflows in FY26. In comparison, equity ETFs garnered ₹77,780 crore, or about 43% of total flows.

This marks a significant change from previous years when ETFs in India were largely equity-driven. As recently as FY24, commodity ETFs accounted for less than 17% of total ETF inflows, highlighting the scale of the shift in FY26.

January 2026 stood out as the most active month, with more than ₹39,000 crore in net inflows, driven by heightened interest in gold and silver ETFs amid global market volatility and geopolitical tensions.

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Gold ETFs' surge

Gold ETFs alone recorded net inflows of ₹68,868 crore in FY26 — more than double the cumulative inflows of around ₹30,200 crore seen over the previous five financial years combined.

The sharp rise in AUM reflects both strong inflows and the rally in gold prices over the past year. With gold emerging as one of the best-performing asset classes globally, investors increasingly turned to ETFs as a convenient and efficient way to gain exposure without dealing with storage or purity concerns associated with physical gold.

Tax considerations have also contributed to the growing preference for ETFs. Gold ETFs are eligible for long-term capital gains (LTCG) tax at 12.5% after 12 months, compared to 24 months for physical gold, making them more attractive for investors with shorter holding horizons.

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Liquidity and participation deepen

The ETF ecosystem in India is also witnessing a sharp improvement in liquidity. Average daily ETF turnover has increased from ₹237 crore in FY21 to over ₹4,200 crore between April 2025 and February 2026—an 18-fold rise in about five years.

Notably, commodity ETFs accounted for a significant share of this growth, with average daily turnover of around ₹2,700 crore, surpassing equity ETF turnover of approximately ₹745 crore during the same period. This reflects both increased investor participation and rising trading activity in gold and silver ETFs.

Structural shift

Market participants view the FY26 trends as indicative of a broader shift in how investors are approaching asset allocation.

“What stands out in FY26 is not just the size of the inflows, but where they came from. For years, ETFs in India were largely an equity story. The fact that Gold and Silver ETFs together attracted more inflows than equity ETFs suggests that investors are beginning to use the ETF structure to build more diversified portfolios,” said Vishal Jain, CEO, Zerodha Fund House.

Outlook

The surge in gold ETF AUM and inflows reflects a combination of macroeconomic factors, including inflation concerns, geopolitical uncertainty, and rising gold prices. As these factors persist, commodity ETFs are likely to remain in focus.

With improving liquidity, tax efficiency, and ease of access, ETFs are increasingly becoming a preferred investment vehicle for Indian investors. The strong momentum in gold and silver ETFs in FY26 signals a growing inclination toward diversified portfolios, marking a structural evolution in India’s investment landscape.

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Published on: Apr 30, 2026 1:04 PM IST