Investor interest in passive investment products continues to grow, with August 2025 seeing record inflows of Rs 11,437 crore into domestic equity-oriented ETFs and index funds, supported by market uncertainties.

In August 2025, gold ETF inflows in India surged by 74% to Rs 2,189 crore from Rs 1,256 crore in July, marking a 36% increase year-on-year, reflecting sustained investor interest.

While most equity index funds experienced a slight negative one-year return of -3.45%, their three- and five-year returns remain positive at 15.36% and 19.05%, respectively, with top funds outperforming the category average.

Passive investment inflows over the last three months have been significant, with August marking the highest monthly inflow, highlighting strong investor confidence in index tracking funds and precious metals.

Passive fund AUM grew by 11.54% year-over-year to Rs 12,502 crore, with silver and gold ETFs leading the growth at 172.72% and 93.89%, respectively, despite market volatility.

Silver ETFs led folio growth at 168.15%, followed by international equity ETFs at 69.31%, and gold ETFs at 41.94%, although some categories like international passive funds saw a decline in folios.

Despite no new gold ETF launches in August, the overall market interest remains stable, driven by gold's role as a safe-haven asset amid ongoing market volatility.

Gold ETFs have delivered an average return of 41.61% in 2025, with the Quantum Gold Fund ETF providing the highest return at around 42.34%, and ICICI Prudential Gold ETF leading with nearly 49.90% over the past year.

Experts attribute the continued demand for gold to its role as a safe-haven asset amid volatile markets, geopolitical tensions, and inflation, with global central bank purchases further supporting confidence.

The four consecutive months of positive inflows underscore gold's ongoing appeal as a portfolio diversifier and tactical hedge in the face of global macroeconomic uncertainties, with investor demand remaining strong despite elevated prices.

Although the growth rate of passive fund assets under management (AUM) has slowed compared to 2024, most categories continue to expand, indicating resilience, though some debt categories have contracted.

Passive fund folio growth slowed to 32.58% year-over-year in August 2025, but total folios increased to 4.46 crore, demonstrating sustained investor interest despite tapering growth.

Debt index funds performed well, with top funds generating around 8.7% to 8.9% returns over one year, benefiting from falling bond yields and longer-duration gilt funds.