Gold outshines equities as ETF inflows surge to Rs 24,040 cr

New Delhi: Equity mutual funds attracted net inflows of Rs 24,028 crore in January, a slump of 14 per cent from the previous month, as investor sentiment remained cautious amid subdued market conditions and ongoing geopolitical concerns. This was the second consecutive month of moderation in equity inflows. Over the past several months, equity markets have delivered muted returns, while commodities, especially gold and silver, have seen strong momentum.

Gold exchange-traded funds (ETFs) recorded a sharp surge in inflows in January, attracting Rs 24,040 crore -- more than double from Rs 11,647 crore in the preceding month -- as gold prices climbed amid rising geopolitical risks. With this, inflows into gold ETFs marginally surpassed those into equity mutual funds for the very first time.

According to data released by Association of Mutual Funds in India (Amfi) on Tuesday, equity inflows softened sequentially from Rs 28,054 crore in December and Rs 29,911 crore in November, although they remained higher than Rs 24,690 crore recorded in October.

For the first time, inflows into gold ETFs marginally surpassed those into equity mutual funds, which saw investments of Rs 24,028.6 crore during the month, according to data released by Association of Mutual Funds in India (Amfi) on Tuesday. The record inflows in gold ETFs in January was “driven by the superior one-year performance of gold and silver relative to other major asset classes”, said Umesh Sharma, CIO Debt, The Wealth Company Mutual Fund. According to Varun Gupta, CEO of Groww Mutual Fund, the strong inflows reflect the increasing financialisation of gold as an investment asset. The trend highlights a shift in investor behaviour, with gold increasingly being viewed as a core portfolio component rather than a tactical allocation. Investor appetite for gold remained robust, driven by its appeal as a safe-haven and diversification tool, said Nehal Meshram, Senior Analyst at Morningstar Investment Research India. “Part of the strength likely reflects fresh allocations at the start of the year, as investors rebalance portfolios and add hedges after a volatile period across risk assets. Gold ETFs continue to benefit from their positioning as a regulated, liquid, and cost-efficient way to hold gold versus physical formats, making them an easy ‘add-on’ allocation during uncertain macro phases,” Meshram added. With latest additions, total inflows into gold ETFs have reached around Rs 61,000 crore in the current financial year. The recent rally in gold and silver prices has also led to a sharp rise in demand for gold and silver ETFs, as investors look for diversified avenues to gain exposure to precious metals.