Passive fund assets climb 5% to Rs 14 lakh crore, driven largely by gold ETF inflows: AMFI

The passive fund market saw a notable increase in October, with AUM rising 5.2% on-month to reach Rs 13.67 lakh crore. This growth was driven by a surge in market prices and a significant influx of fresh inflows into the category, which totaled Rs 16,668 crore. This month marked the 60th consecutive month of positive inflows into the market, according to a monthly note by Association of Mutual Funds in India (AMFI).

Gold exchange-traded funds (ETFs) were the primary beneficiaries of the surge, attracting a substantial Rs 7,743 crore, which accounted for 46% of the category’s flow. The rising price of gold, coupled with heightened demand for safe-haven assets, drove this influx. Additionally, expectations of US rate cuts and the ongoing accumulation of gold by central banks have led to increased inflows into the category, as investors seek to hedge against market volatility.

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Silver ETFs garnered significant attention, attracting inflows of Rs 3,412 crore, which accounted for 20% of the total passive category flows. Furthermore, Gold and Silver ETFs collectively dominated the passive fund landscape, comprising over 66% of total inflows. This trend underscores the increasing appeal of precious metals as a portfolio diversification strategy among investors, particularly in the face of global market uncertainty and volatility, the note said.

Expert take

“Between September and October 2025, passive AUM increased from Rs 12.65 lakh crore to Rs 13.30 lakh crore, reflecting a healthy month-on-month growth. This momentum shows an inclination in investor preference towards transparent and cost-efficient investment options. As more investors adopt passive strategies for long-term wealth creation, this trend will continue to play an important role in expanding overall market participation,” said Hemen Bhatia, Executive Director and CEO, Angel One Asset Management Company.

The hybrid fund category grew moderately in October, with assets rising 3.6% on-month to Rs 10.70 lakh crore, driven by a net inflow of Rs 14,156 crore.

The highest inflows were in arbitrage funds at Rs 6,920 crore followed by multi-asset allocation funds with Rs 5,344 crore. While Multi-asset allocation funds offer a unique blend of asset classes, including equities, fixed income, derivatives and commodities such as gold, Arbitrage funds have become increasingly popular for their ability to hedge against market fluctuations, providing balanced investment experience.

The equity fund category witnessed net inflows for the 56th consecutive month in October, amounting to Rs 24,690 crore. The Indian stock market rebounded in October, achieving its best monthly gain since April, with the Nifty 50 rising 4.5%. This was driven by factors such as expectations of US Federal Reserve interest rate cuts, progress in US-China trade relations, strong corporate earnings, and domestic demand during the festive season.

The AUM of open-ended debt funds rose 9.6% on-month to Rs 19.51 lakh crore in October from Rs 17.80 lakh crore in September mainly on account of huge inflows in short-term debt. Easing inflation concerns and steady liquidity supported demand for debt instruments through the month. Bond yields remained largely stable, with investors closely tracking fiscal developments, state debt supply and monetary policy signals from the Reserve Bank of India and the United States Federal Reserve.

The mutual fund industry’s assets rose 5.6% on-month and 18.8% on-year to Rs 79.88 lakh crore in October (vs Rs 75.61 lakh crore in September), driven by fund inflows across asset classes, including equity, debt and gold and mark-to-market (MTM) gains.

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The mutual fund industry added 40.81 lakh new folios in October, taking the total folio count to 25.60 crore from 25.19 crore in September. The equity category and the ‘others’ category (which largely comprises passive funds) added 15.11 lakh and 21.96 lakh folios, respectively.

SIP inflows touched a new all-time high of Rs 29,529 crore in October, marking a growth of 0.57% on-month and 16.6% on-year. Reflecting this continued momentum, SIP assets rose to Rs 16.25 lakh crore, accounting for 20.3% of the industry’s AUM. This represents a 4.7% increase over the previous month and a 22.2% rise on-year, highlighting the strength of retail participation and growing investor confidence in SIP despite market volatility.

“The addition of 40 lakh new folios and a 45% YoY jump in new SIP registrations to Rs 29,631 crore highlight growing investor discipline and broad-based retail participation,” said Kartik Jain, MD & CEO, Shriram AMC.

SIF

SIF (Specialised Investment Fund) strategies were successfully launched in October 2025, attracting net inflows of Rs 2,004.56 crore. During the month, a total of four new schemes were introduced, comprising one equity long short fund and three hybrid long short funds.

As of October 2025, the combined Asset Under Management (AUM) of these newly launched schemes stood at Rs 2,010.44 crore.

“During the month, SIFs have seen a debut giving options beyond just mutual funds for the mass affluent segment of investors,” said Venkat N Chalasani, Chief Executive, AMFI.

(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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