Equity's not the only gold on D-St, 'precious' ETF flows double in Jan

Mumbai: Mutual fund investors doubled their allocations to precious metals in January, riding the eye-popping surge in silver and gold prices. Monthly flows into gold and silver schemes exceeded those into equity funds - the industry's growth engine in recent years - for the first time.

Gold and silver Exchange Traded Funds (ETFs) garnered ₹33,503 crore in January, more than double December's ₹15,600 crore. The surge extends a trend that began in November, when flows were ₹5,896 crore. Flows into the underperforming equity mutual fund moderated, slipping 14% to ₹24,029 crore in January, even as SIP collections held steady at ₹31,002 crore.

"Performance chasing behaviour is clearly visible in data," says Viraj Gandhi, CEO, Samco Mutual Fund.


Multi-asset allocation funds - which blend equities, precious metals, international stocks and fixed income - also saw heightened interest, with inflows climbing to ₹10,485 crore from ₹7,426 crore a month earlier.

Within precious metals, gold ETFs drew ₹24,040 crore in January, up from ₹11,647 crore in December, while silver ETFs attracted ₹9,463 crore, compared with ₹3,962 crore previously. Over the past year, gold has returned 80%, while silver has surged 158% in rupee terms.

Flexi-cap funds remained the top equity category but still saw a pullback, drawing ₹7,672 crore, down from ₹10,010 crore in December. Investors continued to tread cautiously in the mid- and small-cap segments. Flows into midcap funds slowed to ₹3,185 crore, compared with ₹4,175 crore in December, while small cap funds drew ₹2,942 crore, down from ₹3,824 crore in the previous month.

"With the exception of flexi-cap schemes, all actively managed equity schemes displayed a significant slowing in collections," says Gandhi.

Industry-wide net assets under management (AUM) rose to ₹80.76 lakh crore, compared with ₹79.98 lakh crore in December, aided by total inflows of ₹74,827 crore into debt funds led by liquid and overnight schemes. January - being the first month of the quarter - typically sees money returning to liquid strategies.

Overnight funds recorded the strongest surge with ₹46,280 crore in inflows, while liquid funds saw ₹30,682 crore in inflows. By contrast, corporate bond funds witnessed ₹11,472 crore in outflows and short-duration funds saw ₹2,888 crore in redemptions

"January's inflows appear driven more by liquidity normalisation and reinvestment flows than a decisive shift toward duration-led strategies, with investors still anchoring allocations in liquid and low-volatility debt categories," says Nehal Meshram, senior analyst, Morningstar Investment Research India.