In the midst of global economic uncertainty and the potential for gold to outperform equity investments, the spotlight is on gold exchange-traded funds (ETFs). According to data from the Association of Mutual Funds in India (AMFI), net inflows in gold ETFs surged to Rs 3,751.4 crore in January 2025 from a nine-month low of Rs 640.16 crore in December 2024, representing an impressive growth of 486%. This marks the highest monthly net inflow ever recorded for Gold ETFs.
In January 2025, Gold ETFs achieved a new all-time high, surpassing the previous record set in October 2024 when it reached Rs 1,961.57 crore. Moreover, the net assets under management of gold ETFs saw a 16.24% increase in January, rising to Rs 51,839.39 crore from ₹44,595.60 crore in December.
Gold ETFs in January 2025
A gold ETF mirrors the domestic prices of physical gold, offering a convenient avenue for investing in gold without the need to worry about storage or authenticity issues.
The Gold ETF’s assets under management (AUM) experienced a 16% increase, rising from Rs 44,595 crore in December to Rs 51,839 crore in January. Year-over-year, the AUM saw a substantial 87% surge, escalating from Rs 27,778 crore in January 2024.
“The recent discontinuation of the Sovereign Gold Bond (SGB) scheme by the central government, due to high borrowing costs, has driven increased interest in gold as an asset class. With no new SGB tranches being issued, investors are shifting their focus to Gold ETFs as an alternative risk-free gold investment. This, along with the recent rise in gold prices, has further fueled demand, making gold a prominent investment choice,” said Shweta Rajani, Head – Mutual Funds, Anand Rathi Wealth Limited.
Net inflows in Gold ETFs have surged to Rs 3,751.4 crore in January 2025, a sharp rise from the nine-month low of Rs 640.16 crore in December 2024, making a growth of 486%. This is highest ever monthly net cash inflow recorded in Gold ETFs. Additionally, net assets under management of gold ETFs increased by 16.24% in January to Rs 51,839.39 crore from Rs 44,595.60 crore in December.
Months INR in Crore MoM Growth
Jan-25 3,751.42 486.01%
Dec-24 640.16 -49.06%
Nov-24 1,256.72 -35.93%
Oct-24 1,961.57 59.09%
Sep-24 1,232.99 -23.48%
Aug-24 1,611.38 20.49%
Jul-24 1,337.35 84.17%
Jun-24 726.16 -12.24%
May-24 827.43 -309.11%
Apr-24 -395.69 -205.98%
Mar-24 373.36 -62.56%
Feb-24 997.22 51.68%
Jan-24 657.46 644.48%
Gold vs Equity
In the last three months, November 24, December 24 and January 25, the return of gold is -3.20%, -0.38% and 7.23%, respectively. Returns and inflows are directly correlated which shows the tendency of people buying past performance and supports the logic of recency bias.
One should understand their risk-adjusted efficiency ratio to decide whether it’s optimal to invest or not. Nifty has delivered the best return while adjusting risk in a 5 year time frame with a higher efficiency ratio.
Should you invest in Gold, Gold ETFs?
Rajani observed that Gold has not been a consistent performer compared to equity.
“Gold’s returns have fluctuated widely over a 5-year period, with a low of just 1.73%, highlighting its volatility. Considering recent market fluctuations and the rise in demand, gold’s prices remain unpredictable. This unpredictability makes it a less dependable asset class for investment compared to Nifty, which has shown stable and consistent returns over the last 25 years. Given this volatility, over reliance on Gold could lead to portfolio instability. Hence, it is advisable to limit gold exposure to a maximum of 5-10% of the overall portfolio to maintain diversification while mitigating risk,” Rajani said.