Gold ETFs shine brighter amid heightened geopolitical volatility and sharp appreciation in gold prices: ICRA Analytics

Mumbai, April 16: Gold ETFs have witnessed a clear rise in preference among investors, both retail and institutional, amid heightened geopolitical volatility and sharp appreciation in gold prices, ICRA Analytics said.

Total assets under management (AUM) of Gold ETFs registered a five-year CAGR of 64.76 per cent at Rs 1,71,468.4 crore in March 2026, as against Rs 14,122.72 crore in March 2021. On a year-on-year basis, net AUM has almost doubled, increasing by nearly 191.18 per cent as compared to Rs 58,887.99 crore in March 2025.

Net inflows into Gold ETFs stood at Rs 2,265.68 crore in March 2026, as against net outflows of Rs -77.21 crore same period last year. Inflows into Gold ETFs stood at Rs 662.45 crore in March 2021. On a month-on-month basis, inflows dropped by 56.88 per cent from Rs 5,254.95 crore in February 2026.

“Gold ETFs have seen a clear rise in preference during the recent phase of heightened geopolitical volatility and sharp gold price appreciation, as investors, both retail and institutional, have actively used them as a defensive and tactical allocation within portfolios. This preference has been driven by the dual impact of global uncertainty and strong returns from gold, which reinforced its traditional role as a safe haven asset,” Ashwini Kumar, Senior Vice President and Head Market Data, ICRA Analytics, said.

There are as many as 26 Gold ETF schemes in the market at present out of which six were launched in 2025-26. A quick analysis of the returns generated by the Gold ETFs suggests that the average 1-year returns across most of these funds range from around 58.81 per cent to 62.85 per cent while the 5-year CAGR returns across most of these funds range from around 25.78 percent to 26.11 percent.

“Even during periods of short-term correction, Gold ETFs retained investor relevance. Although inflows moderated sharply in Feb and Mar 2026, due to gold price correction, and temporary easing of global risk aversion, nonetheless flows remained positive, indicating that investor interest had not structurally reversed,” Kumar said.

Talking about the growing investor preference for Gold ETFs, Kumar said,

“Gold ETFs are better suited for investment, portfolio diversification and tactical asset allocation, while physical gold is more appropriate for consumption and long-term holding driven by cultural preference. For most financial investors, Gold ETFs offer a cleaner, more efficient and transparent way to gain exposure to gold prices, whereas physical gold serves non-investment objectives better.”

Top 10 Best-performing funds:

Data as on March 31, 2026, Less than 1-year Absolute returns, Greater than or Equal to 1 year Compound Annualized returns. Top 10 funds based on 3-year CAGR return