Gold Emerges as a Preferred Investment Choice Beyond Indian Households
Gold has emerged as a prominent investment choice for both individual and corporate investors in India, particularly in the form of gold exchange-traded funds (ETFs). Recent data indicates that corporate assets under management (AUM) in gold ETFs have surged significantly, reflecting a broader trend of increasing interest in gold as a safe haven asset amid global uncertainties. As of March 2025, corporate investments in gold ETFs reached ₹36,154.5 crore, marking a remarkable annual growth rate of 55%. This shift underscores the evolving landscape of gold investment in India.
Corporate Investment Trends in Gold ETFs
The growing interest in gold ETFs among corporate entities is noteworthy. Companies, family offices, trusts, and organizations have ramped up their investments in gold, particularly in light of the recent surge in gold prices. The proportion of corporate AUM in gold ETFs has climbed to 61.4%, a significant increase from 50% in March 2020. In contrast, the share of individual investors has decreased, dropping to 7.5% in 2025 from 16.1% in 2020. Despite this decline, retail folios have seen a 37% year-on-year increase, reaching approximately 6.8 million, while their AUM grew by 39% to ₹4,440 crore. This growth occurred during a period marked by substantial price increases for gold, driven by institutional purchasing.
Traditionally, corporate investors have favored money market and liquid funds due to their high liquidity and low-risk profiles. However, the current trend shows a shift towards gold ETFs as a means of diversifying investment portfolios. Vikram Dhawan, Head of Commodities and Fund Manager at Nippon India Mutual Fund, noted that institutions are increasingly allocating funds to gold as part of diversified strategies aimed at managing risk and preserving capital. This reflects a growing confidence in gold ETFs as a transparent and efficient way to gain exposure to bullion within a regulated framework.
Significant Surge in Gold Prices
Gold prices have experienced a dramatic increase, surpassing ₹1 lakh per 10 grams in June 2025. This surge is largely attributed to investors seeking safety amid global political unrest. By the end of March 2025, the price of 24-carat gold had reached ₹89,000 per 10 grams, marking a nearly 30% increase from ₹69,000 the previous year. The rise in gold prices has prompted many investors to consider gold ETFs as a viable investment option.
The total AUM in gold ETFs includes retail investments made through Fund of Fund (FoF) schemes, which invest in various other funds. In mutual fund reporting systems, ETF investments via FoFs are categorized as “corporate” AUM rather than retail or high-net-worth individual investments. Niranjan Avasthi, senior vice president at Edelweiss AMC, explained that the AUM figures primarily reflect corporate investments because retail investors typically access gold through FoFs, which directly hold ETF units.
Multi-asset funds, which are popular among investors, also include gold ETF investments in their portfolios. When an Asset Management Company (AMC) lacks its own gold ETF, investments from their gold FoFs or multi-asset funds are directed into other AMCs’ gold ETFs. These investments are recorded as corporate AUM in the respective gold ETFs, highlighting the interconnected nature of investment strategies in the gold market.
Impact of Tax Modifications on Retail Investments
Since July 2024, individual investors have increasingly turned to gold Fund of Funds (FoFs), driven by favorable tax modifications. The government’s budget announcement indicated that gold and equity-oriented FoFs held for more than 24 months would incur a long-term capital gains tax of 12.5%. This change has incentivized retail investors to explore gold investments through FoFs, contributing to the overall growth in gold ETF AUM.
The evolving dynamics of gold investment in India reflect a broader trend of diversification among investors. With rising gold prices and changing tax regulations, both corporate and individual investors are adapting their strategies to capitalize on the opportunities presented by gold ETFs. As the market continues to evolve, gold remains a key asset for those seeking stability and growth in their investment portfolios.
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