Gold and silver exchange traded funds (ETFs) and fund of funds (FoFs) are witnessing a surge in retail investor interest, rarely seen in any mutual fund (MF) category in the past.
The precious metal ETFs together added 2.8 million investment accounts or folios in January 2025, accounting for 55 per cent of the net folio additions at the industry level last month. The additions last month were over five times the average monthly rise seen in 2025. In comparison, equity schemes added just 1.1 million folios.
Investor participation is also picking up through the FoFs route. The net new account additions in domestic FoFs, which include all schemes across equity, debt and commodities, have seen a sharp surge in recent months, broadly in line with the pick-up in gold and silver ETFs. In January, domestic FoFs added 2.2 million accounts.
The industry does not provide separate data for gold and silver FoFs.
Interestingly, net new account openings in silver ETFs were higher compared to gold ETFs, which is a much larger fund category. Silver ETFs added a net of 1.6 million folios in January, while gold ETF folios grew by 1.2 million.
According to experts, while the sharp rally in precious metal prices is drawing new investors to gold and silver schemes, the relatively higher volatility in silver is also attracting momentum-driven investors and fuelling a rise in short-term trading activity in silver ETFs.
“Silver, being structurally more volatile than gold, tends to attract higher momentum-driven participation. Its sharper price swings are encouraging investors to seek short-term opportunities, which is also reflected in the faster folio growth in silver ETFs compared to gold ETFs,” said Sriram BKR, Senior Investment Strategist, Geojit Investments.
Partha Sen Gupta, Joint MD & CEO at Systematix Private Wealth, attributed a similar reason to the surge in silver ETF folios. “The frenzy in silver ETFs appears partly driven by short-term return expectations. A 170 per cent annual gain naturally attracts momentum traders seeking quick upside, especially when recent drawdowns have been shallow,” he said.
The last time an MF category witnessed a similar pace of folio additions was in the first half of 2024, when thematic and sectoral funds were adding record numbers of accounts. However, unlike gold and silver ETFs, the growth in thematic funds was largely driven by a slew of new fund offerings.
The growing investor interest in gold and silver is also evident in inflows. Net inflows into gold ETFs outpaced collections by active equity MF schemes for the first time last month. Gold ETFs attracted net inflows of Rs 24,040 crore in January, while silver ETFs attracted nearly Rs 9,500 crore. Active equity schemes continued to witness a moderation in flows as net inflows declined to a seven-month low of Rs 24,028 crore.