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Time of India
02-07-2025
- Business
- Time of India
Gold a darling investment not just for Indian households! Why corporates are investing big in gold ETFs
Gold prices surpassed ₹1 lakh per 10 grams in June 2025, primarily due to investors seeking safety during global political unrest. (AI image) Gold has always found traction as a safe haven asset in Indian households. But, you may be surprised to know that corporates are also investing in a big way in the precious metal - albeit its paper version, the gold ETFs. During a five-year period when gold prices increased by 86% in dollar terms per troy ounce, corporate assets under management (AUM) in gold ETFs experienced substantial growth at 55% annually, reaching ₹36,154.5 crore by March 2025, according to Value Research data quoted in an ET report. Why Corporates Are Betting on Gold ETFs Corporate entities, including companies, family offices, trusts and organisations, have increased their involvement in gold investments, particularly due to the unprecedented surge in gold prices over the past year. Corporates proportion of total Gold ETF AUM has risen to an unprecedented 61.4%—up from 50% in March 2020. In contrast, individual investors' share in the AUM decreased significantly—falling to 7.5% in 2025 from 16.1% in 2020. Nevertheless, retail folios increased by 37% year-on-year in 2025 to approximately 6.8 million, while their AUM grew by 39% to ₹4,440 crore during a year that saw the largest price increase for the secure asset due to global institutional purchasing. Traditionally, corporate investors have favoured the money market and liquid funds because of their high liquidity and minimal risk profile. These liquid funds, which come without entry or exit charges, enable straightforward cash management. However, these investors are now considering gold ETFs to diversify their investment portfolios, appreciating the convenience of holding gold in electronic 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,' the financial daily quoted him as saying. Huge Rise in Gold Prices Gold prices surpassed ₹1 lakh per 10 grams in June 2025, primarily due to investors seeking safety during global political unrest. By March-end this year, 24-carat gold reached ₹89,000 per 10 grams, showing a significant increase of nearly 30% from ₹69,000 in the previous year. Gold ETFs The total gold ETF Assets Under Management (AUM) includes retail investments made through Fund of Fund (FoF) schemes, which are investment products that put money into other funds. These FoFs are specific mutual fund schemes that invest in various other schemes or products. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Memperdagangkan CFD Emas dengan salah satu spread terendah? IC Markets Mendaftar Undo In mutual fund reporting systems, ETF investments via FoFs are categorised as "corporate" AUM rather than retail or HNI investments. This classification occurs because the FoF scheme, operated by a mutual fund, holds the ETF units directly. "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. Also Read | India has the world's 7th highest gold reserves! Why is RBI buying gold and how does it help the Indian economy? Multi-asset funds, which are favoured by investors, also include gold ETF investments in their portfolio. When an Asset Management Company (AMC) lacks its own gold ETF, investments from their gold FoFs or multi-asset funds go into other AMCs' gold ETFs. These investments appear as corporate AUM in the respective gold ETFs, according to Avasthi. When AMCs without their own gold ETF receive investments for their gold FoFs, they direct these funds into other companies' gold ETFs. Subsequently, these investments are documented as corporate AUM in those particular gold ETFs, as explained by Avasthi. Individual investors have increased their investments in gold Fund of Funds (FoFs) since July 2024, primarily due to advantageous tax modifications. The government's budget declaration established that when gold and equity-oriented FoFs are retained beyond 24 months, they would attract a long-term capital gains tax of 12.5%. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Time of India
02-07-2025
- Business
- Time of India
Gold Rush 2.0: Corporates strike it rich in ETF bonanza
Growing institutional confidence Live Events Inflation, risk hedge Tax tweaks (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel 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 share of total Gold ETF AUM has climbed to a record high of 61.4%—from 50% in March 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 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 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.'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 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 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 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 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.
