Commodity Fund Inflows Plummet by Rs 45,708 Crore in February Despite Strong Annual Returns
Synopsis
In February 2026, commodity fund inflows faced a drastic decrease of Rs 45,708 crore, although the asset class achieved an 80.3% annual return. Explore the reasons behind this decline and its implications for investors.
Key Takeaways
Commodity fund inflows fell by Rs 45,708 crore.
Annual return for commodities: 80.3%.
Equity flows decreased by 19%.
Mid-Cap and Small-Cap stocks showed growth.
Factor funds surged due to new investment opportunities.
New Delhi, March 18 (NationPress) In February 2026, there was a significant decline in commodity fund inflows, which dropped by Rs 45,708 crore, according to a report released on Wednesday. Despite this setback, the asset class managed to surpass its competitors with an impressive annual return of 80.3%.
As noted in the report by Vallum Capital, "Commodity flows plummeted as the fervor for gold diminished, and the money market experienced a sharp decline. While fixed income assets continued to see outflows, equity investments remained relatively stable."
The total net asset level flows nearly halved, decreasing from Rs 1,64,277 crore in January to Rs 73,842 crore in February.
In the commodities sector, net fund flows fell drastically from Rs 51,483 crore in January to just Rs 5,774 crore in February, representing an approximately 89% drop. Additionally, money market flows decreased by around 45%, totaling Rs 42,970 crore, as reported.
Equity fund flows also saw a reduction, dropping from Rs 52,110 crore to Rs 42,017 crore, which is a decline of approximately 19%.
Fixed income outflows slightly decreased from Rs 17,037 crore to Rs 16,919 crore.
In February, commodities faced a significant reversal, particularly in gold and silver, following a surge in January, marking the sharpest single-month flow decline across all asset classes.
The report further highlighted that February showed mean reversion from the extremes observed in January: the cooling of the gold frenzy, the normalization of the money market, and the dip-buying trend emerging in mid-cap and tech stocks, while fixed income outflows continued.
Broad market equity funds saw a decrease to Rs 27,254 crore from Rs 30,359 crore. Large-Cap investments fell to Rs 9,316 crore from Rs 11,007 crore, but still maintained a dominant position.
Interestingly, Mid-Cap and Small-Cap stocks defied the trend, with Mid-Cap rising to Rs 3,739 crore from Rs 3,297 crore and Small-Cap increasing to Rs 3,055 crore from Rs 2,536 crore, indicating dip-buying activity in these undervalued sectors.
Factor funds surged to Rs 4,495 crore from Rs 3,116 crore, primarily driven by quality investments which reached Rs 2,261 crore (up from Rs 125 crore) due to a new NFO launch that absorbed over half the total for this category.
aar/rad
Point of View
I observe that the substantial plunge in commodity fund inflows highlights the volatility within asset markets. Despite the impressive annual returns, the decline raises questions about market stability and investor confidence.
NationPress
9 May 2026
Frequently Asked Questions
What caused the decline in commodity fund inflows in February 2026?
The decline was attributed to the fading interest in gold, coupled with a sharp cooling in the money market and ongoing outflows in fixed income.
How much did the commodity fund inflows drop?
Commodity fund inflows dropped by Rs 45,708 crore in February 2026.
What was the annual return for commodities?
Despite the decline in inflows, commodities achieved an impressive annual return of 80.3%.
How did equity fund flows change in February?
Equity fund flows decreased from Rs 52,110 crore in January to Rs 42,017 crore in February, marking a decline of approximately 19%.
What are factor funds and how did they perform?
Factor funds saw an increase to Rs 4,495 crore, with a notable rise in quality investments due to a new NFO launch.
