Silver ETFs deliver 62% XIRR since launch, outpace gold ETFs’ 42%. Should allocation strategies change?

Silver ETFs, launched in India in January 2022, have delivered a striking performance over the past four years on SIP investments, posting nearly 62% XIRR between February 6, 2022 and February 6, 2026, an analysis by ETMutualFunds showed.

In comparison, gold ETFs returned around 42% XIRR over the same period. This gap in performance has raised an important question for investors: should portfolio allocation strategies change in favour of silver? Market experts say that this stellar performance is due to the low base effect along with a strong recovery phase for silver prices.

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Rajesh Minocha, a Certified Financial Planner (CFP) and Founder of Financial Radiance, shared with ETMutualFunds that the 62% XIRR for silver reflects a low base, and silver’s strong performance is due to its low starting point and increased price volatility, driven by post-pandemic industrial demand growth and global economic instability.

Minocha further said that demand for about 50% of silver comes from industries and is therefore subject to sectoral fluctuations. Gold, by contrast, delivers consistent returns and serves as a stabilising asset in portfolios rather than a source of high active returns.

Another expert, Shivam Pathak, CFP and Founder of Asset Elixir, told ETMutualFunds that the higher returns in silver ETFs are partly a function of the low base after their 2022 launch, which coincided with a strong recovery phase for silver prices.

Pathak also said that silver is structurally more volatile than gold, so its rallies tend to be sharper and the performance gap should therefore be seen in the context of higher risk, not as a like-to-like comparison with gold.

The analysis by ETMutualFunds showed that three silver ETFs, ICICI Pru Silver ETF, Aditya Birla SL Silver ETF and Nippon India Silver ETF, launched up to February 2, 2022, gave 62.70%, 62.63% and 62.29% XIRR respectively over the last four years on SIP investments.

In the said period, there were 11 gold ETFs which gave an XIRR of around 42%. Quantum Gold Fund ETF gave an XIRR of 42.54%, whereas LIC MF Gold ETF gave 42.16% XIRR in the same period.

A monthly SIP of Rs 10,000 made in these three silver ETFs would have been worth Rs 1.46 lakh now, whereas the same SIP made in gold ETFs would have been Rs 1.04 lakh each, indicating a difference of Rs 41,261 in absolute terms.

Should you rebalance your portfolio?

Pathak said that gold should remain the core allocation among precious metals due to its role as a hedge and portfolio stabiliser. Silver can be added as a tactical or satellite exposure, but portfolios should avoid tilting heavily towards silver based only on recent performance.

In response to this, Minocha said that investors should maintain their holdings in gold and silver ETFs. Gold should remain the core precious metal allocation, with silver serving as a tactical addition.

“Given recent price movements and ongoing market instability, investors are advised to use SIPs and phased investing for silver and not just chase past returns and expect that to continue. Investors can also invest through multi-asset funds wherein the fund managers will make allocation within equity, debt and commodities based on their outlook,” Minocha further said.

Recently, gold and silver ETFs witnessed extreme volatility. After delivering stellar performance in 2025, silver ETFs are down by 14.84% on average, while gold ETFs have offered muted average returns of 0.46% in the past two weeks, as on February 5, 2026.

Gold and silver funds are used for portfolio diversification. If you have a large portfolio, you can earmark a small percentage of the total portfolio, advisors say around 10%, to invest in gold and or silver. These funds are supposed to offer diversification and add stability to the portfolio in times of economic turmoil.

Also Read | Gold, silver ETFs see sharp correction: Redeem, hold or buy more?

So, should silver allocation be capped despite strong long-term performance and recent volatility? Minocha said that silver allocations should be subject to a maximum limit to manage risk, regardless of past performance. As both an industrial and precious metal, silver is subject to higher price volatility. Precious metals should comprise 20 to 30% of the total precious metal holdings.

Sharing a similar view, Pathak said allocation in silver should be capped despite stellar performance, as it works better as a return enhancer rather than a core defensive holding.

Recent picture

In the last one year, silver ETFs gave an average return of 220.42%, while gold ETFs gave an average return of 90.19%.

January 2026 was a very eventful month for gold and silver. Prices of both metals went up sharply during most of the month as many investors rushed towards safe options due to uncertainty in global markets. Gold and silver were seen as protection for capital, pushing prices higher.

Gold and silver reached very high levels, close to record prices. On January 29, gold and silver futures scaled fresh lifetime highs on the Multi Commodity Exchange (MCX). Silver surged past the Rs 4 lakh mark for the first time, while gold climbed closer to Rs 1.8 lakh per 10 grams.

However, towards the end of the month, prices corrected sharply as investors booked profits. On January 30, silver delivered a stunning reversal on the MCX, plunging up to 27%, or Rs 1,07,968, in a single day, marking its worst-ever crash and dragging prices back below the Rs 3 lakh mark, just a day after hitting Rs 4 lakh.

Gold prices also fell sharply, tanking up to 12%, or Rs 20,514, in a single day on January 30, marking their worst one-day fall since March 2013, when prices had plunged 9% on the MCX.

On January 31, silver again delivered a sharp reversal on the MCX, plunging up to 25%, or Rs 92,000, in a single day, marking its worst crash in 15 years and dragging prices back below the Rs 3 lakh mark.

So what lies ahead for these precious metals?

Pathak said that gold and silver ETFs are best used as diversification tools rather than primary wealth creation assets. Gold provides stability during periods of uncertainty, while silver can add growth during favourable cycles. The outlook remains constructive, but disciplined allocation is key.

Citing similar reasons on how gold and silver protect investment portfolios, Minocha said the outlook remains positive.

Also Read | Buy gold on corrections; rebalance silver via partial profit booking: Motilal Oswal PW

“If combined, they improve risk management, but investors should not rely on them as primary wealth building assets, as equities typically deliver stronger returns over the long term. Past returns in the last few months should not be the basis for future long-term investments.”

Minocha further said that asset classes behave differently year on year and rotate on a regular basis, and no asset class remains the top performer always. Investors should therefore believe in asset allocation and invest based on their goals, risk appetite and time horizon.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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