In fiscal year 2024-25, Gold Exchange-Traded Funds (ETFs) have accumulated approximately 27,000 crore in assets.
Gold Investment Rush in India's FY25:
Listeners, the latest financial year (FY25) has been nothing short of goldrush for Exchange Traded Funds (ETFs) backed by the yellow metal. They managed to rake in a whopping Rs 27,000 crore, boasting a total AUM of Rs 58,887 crore by the year's end - a staggering increase from Rs 31,223 crore in the previous fiscal.
Now let's dig a bit deeper into what fueled this gold fever.
Firstly, the superior performance of Gold ETFs, offering returns exceeding 30%, goes a long way in outshining the measly 5-8% returns of traditional investments like liquid debt funds, equity indices, or fixed deposits. This extraordinary performance, coupled with the desire for portfolio diversification, drew in investors in droves like moths to a flame.
Secondly, institutional investors, especially life insurance companies managing a staggering ₹70 lakh crore, showed a keen interest in investing 3-5% of their assets in Gold ETFs. The Insurance Regulatory and Development Authority of India (IRDAI) granted them the approval to do so, looking to enhance returns and hedge against market volatility.
Thirdly, the surge in global gold prices and rising demand for the yellow metal as a safe-haven asset added fuel to the fire. With markets drowning in uncertainty, investors found solace in gold.
Fourthly, the Reserve Bank of India's (RBI) strategic moves played a significant part in the gold boom. The RBI boosted its gold reserves by 7%, amassing an impressive 879.58 tonnes, and repatriating over 100 tonnes from overseas vaults to domestic holdings. A 57% surge in gold's value in the RBI's Banking Department portfolio, fueled by additions in tonnage, skyrocketing international prices, and the depreciation of the rupee, just reinforced the confidence in gold as a secure investment.
Lastly, the continued interest from retail investors, reflected in steady inflows, has kept the gold party going strong till the end of FY25. May 2025 even saw renewed inflows of Rs 292 crore after a slight outflow in April.
In a nutshell, the gold obsession in FY25's India was driven by superior gold ETF returns, institutional endorsements for diversification and hedging, rising gold prices, the RBI's strategic gold play, and sustained retail investor enthusiasm. It seems like we ain't seen the end of this golden era just yet!
Real-estate investors might consider shifting a portion of their assets into gold-backed investments, as the exceptional performance of Gold ETFs in FY25, offering returns exceeding 30%, demonstrates promising potential for high returns. Institutional investors, such as life insurance companies, have also started delving into gold ETFs, with the Insurance Regulatory and Development Authority of India (IRDAI) approving investments of up to 5% of their assets in these investments.
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