Gold Rush 2.0: Corporates strike it rich in ETF bonanza
Gold has been the traditional store of value for the ordinary Indian saver over centuries. Corporates, too, are now big investors in the safe-haven asset—rather, its paper derivative—and have an increasingly dominant share in gold exchange-traded funds (ETFs).
Over the past five years, through which the value of gold per troy ounce surged 86% in dollar terms, corporate assets under management (AUM) in gold ETFs has climbed at a rapid 55% annually, reaching ₹36,154.5 crore by March 2025, showed Value Research data.
Growing institutional confidence
Their share of total Gold ETF AUM has climbed to a record high of 61.4%—from 50% in March 2020. By contrast, retail investors saw their share in the AUM more than halve—to 7.5% in 2025 from 16.1% in 2020. However, the number of retail folios jumped 37% year-on-year in 2025 to about 6.8 million, while their AUM climbed 39% to ₹4,440 crore through the year that witnessed the biggest price increase for the safe-haven metal on institutional buying globally. Corporate investors include companies, family offices, trusts, and other organisations. Their growing participation is in the wake of the record-breaking rally in gold prices in the past year.
Generally, corporate entities prefer investing in money market funds/liquid funds due to high liquidity and low risk. Liquid funds do not charge any entry or exit load, facilitating easy cash management. However, they are also looking at gold ETFs as a part of diversification of their investments as it is easier to hold gold in paper form. “They (institutions) are now more actively allocating to gold as part of diversified strategies aimed at managing risk and preserving capital,” said Vikram Dhawan, Head of Commodities and Fund Manager at Nippon India Mutual Fund. “This shift reflects growing institutional confidence in Gold ETFs as an efficient and transparent vehicle for accessing bullion exposure within a regulated framework.”
Inflation, risk hedge
Gold prices crossed ₹1 lakh per 10 grams in June 2025, driven by safe-haven demand amid geopolitical tensions. At the end of March this year, 24-carat gold was priced at ₹89,000 per 10 grams, up nearly 30% from ₹69,000 a year earlier.
A part of the corporate contribution to the total gold ETF AUM also includes retail investor contribution into the product through the Fund of Fund (FoF) category, which invests in these funds. Mutual funds’ FoFs invest in other schemes or products.
When mutual funds report ETF holdings by investor type, the FoF investments into ETFs are typically classified under “corporate” AUM and not under retail or HNI. This is because the holder of the ETF units is the FoF scheme itself, which is managed by a mutual fund.
“The AUM figures primarily reflect corporate investments because retail investors usually access gold through Fund of Funds (FoFs), which in turn invest in Gold ETFs,” said Niranjan Avasthi, senior vice president, Edelweiss AMC.
Additionally, multi-asset funds, popular among investors, also allocate to gold ETFs. In cases where an AMC doesn’t offer its own gold ETF, investments from its gold FoFs or multi-asset funds are routed into gold ETFs of other AMCs. These flows are classified as corporate AUM in the underlying gold ETFs, Avasthi said.
AMCs that do not have their own gold ETF invest in such ETFs of other asset managers when money flows into their gold FoFs. As a result, this is recorded as corporate AUM in those gold ETFs, Avasthi said.
Tax tweaks
The higher flows from individual investors through gold FoFs are partly on account of the more favourable taxation since July 2024. The government, in its budget announcement, said long-term capital gains tax on gold and equity-oriented FoFs would be at 12.5% if held over 24 months.