Investor appetite for gold exchange-traded funds (ETFs) showed signs of cooling in March, even as inflows remained firmly positive. Net inflows stood at ₹2,265.68 crore during the month, sharply lower than February’s ₹5,254.95 crore, marking a steep 56.9% sequential decline.

This moderation comes on the heels of a blockbuster January, when inflows had surged past ₹24,000 crore, according to the latest data released by the Association of Mutual Funds in India (AMFI).

However, despite continued inflows, the overall asset base of gold ETFs shrank. Assets under management (AUM) slipped from ₹1.79 lakh crore to ₹1.71 lakh crore, as declining gold prices weighed on portfolio valuations, the data showed.

The slowdown reflects a natural cooling-off after an exceptionally strong January, said Nehal Meshram, Senior Analyst at Morningstar Investment Research India. “The moderation in inflows is partly a normalisation effect following a surge driven by heightened risk aversion, portfolio rebalancing, and momentum in gold prices,” she noted.

Despite the sequential dip, investor interest in gold remains firmly intact. Meshram highlighted that March’s positive flows indicate that gold continues to play a dual role - as both a tactical hedge and a strategic portfolio diversifier - particularly amid ongoing macroeconomic uncertainty.

She added that gold ETFs remain an attractive route for investors seeking exposure to the metal in a liquid, transparent, and convenient format, without the challenges of physical ownership.

On a quarterly basis, gold ETFs recorded cumulative inflows of ₹31,561 crore in Q1 2026, underscoring sustained demand despite the month-on-month moderation. “The trend suggests that gold continues to be used both as a tactical hedge and as a strategic portfolio allocation,” Meshram added.

Silver ETFs continue to see outflows

On the other hand, silver ETFs saw net outflows of ₹683.9 crore in March, as heightened price volatility led investors to trim exposure. This extends a trend reversal that began in February, when the segment recorded its first net outflow in nearly 28 months, with withdrawals of about ₹826 crore.

Meanwhile, AUM in silver ETFs dropped sharply—from around ₹91,975 crore to ₹79,805 crore, resulting in an erosion of nearly ₹12,000 crore, largely driven by adverse price movements.

Rohit Sarin, Co-founder, Client Associates, said gold ETFs continued to witness steady inflows in March, reflecting sustained investor interest in diversifying beyond equities amid global uncertainty and macro volatility. He added that silver and other commodity-linked ETFs, while smaller in scale, are gradually gaining traction as investors look to diversify within metals beyond traditional gold exposure.

According to Nitin Agrawal, CEO - Mutual Funds at InCred Money, the softer flows into gold ETFs may also signal a shift in investor preference. “Moderation in gold ETF flows points to renewed optimism around equities. The broader takeaway from March is that while industry AUM has declined, investor confidence has not. Instead, we are seeing a more diversified and deliberate approach to investing,” he said.

Equity-oriented schemes record strong inflows

Equity-oriented schemes saw strong inflows of nearly ₹40,000 crore in March, about 40% higher than the previous month, driven by improved valuations following the recent market correction amid the West Asia conflict.

Varun Gupta, CEO of Groww Mutual Fund, emphasised this structural shift. “Rather than exiting markets during uncertainty, investors are increasingly embracing diversification within the mutual fund framework. Multi-asset allocation funds continue to attract consistent inflows, reinforcing the importance of balanced investing,” he said.

Umesh Sharma, CIO–Debt at The Wealth Company Mutual Fund, noted that investors are increasingly tilting toward growth assets. “March flows reflect a clear preference for equities, as corrections created attractive entry points. Small- and mid-cap funds, in particular, saw stronger allocations as valuations became more reasonable and return potential improved,” he said.

Debt categories face pressure

Debt-oriented schemes recorded massive outflows of ₹2.95 lakh crore, largely due to seasonal liquidity needs at the financial year-end, along with continued concerns around rising yields and inflation. Corporate bond funds alone saw outflows of nearly ₹15,000 crore, as investors reassessed duration risk amid heightened volatility.

“Such outflows at the shorter end of the curve are a recurring seasonal trend, as March coincides with both quarter-end and financial year-end liquidity requirements - a pattern observed consistently each year,” Sharma said.

He further added that hybrid funds presented a mixed picture. While arbitrage funds saw heavy redemptions, multi-asset allocation funds continued to gain traction, with inflows exceeding ₹5,000 crore. This trend highlights a growing investor preference for diversified strategies in uncertain markets.