Gold ETF folios surge 2.6x in 3 years, nearly half of large-cap AUM
Synopsis
India's gold ETF boom is flashing a warning sign: folios have grown 2.6x in three years and AUM has hit nearly ₹1.9 lakh crore — almost half of what large-cap equity funds manage. OmniScience Capital says the surge is FOMO-driven, not strategy-led, and that gold's share in many portfolios is now well outside recommended bounds.
Key Takeaways
Gold ETF folios have risen 2.6 times since September 2023 , versus a 1.3-fold increase in large-cap fund folios.
Total gold ETF AUM has reached nearly ₹1.9 lakh crore — roughly 47% of the ₹4 lakh crore managed by large-cap equity funds.
OmniScience Capital says the inflow is FOMO-driven, not aligned with disciplined asset allocation frameworks.
Standard guidelines recommend capping gold at 5–10% of a portfolio, with all alternatives at 10–20% .
The firm cautions that central bank buying may not sustain gold's rally if investors shift toward higher-yielding debt instruments.
Gold ETF folios in India have expanded 2.6 times since September 2023, sharply outpacing the 1.3-fold rise in large-cap equity mutual fund folios over the same period, according to an analysis by OmniScience Capital released on 6 November 2026. The report warns that investor enthusiasm for gold exchange-traded funds is being driven primarily by recent price appreciation rather than disciplined portfolio strategy.
The Scale of the Shift
The total assets under management (AUM) of gold ETFs have climbed to nearly ₹1.9 lakh crore — equivalent to almost half of the roughly ₹4 lakh crore managed by large-cap equity funds. OmniScience Capital noted that this ratio appears inconsistent with standard asset allocation frameworks, which typically recommend capping gold at 5–10% of a portfolio, with the broader alternatives bucket — covering private equity, structured debt, Specialised Investment Funds (SIFs), REITs, and InvITs — accounting for around 10–20%.
FOMO, Not Fundamentals
Ashwini Shami, President and Chief Portfolio Manager at OmniScience Capital, attributed the surge to fear-of-missing-out behaviour rather than strategic rebalancing. 'We believe this FOMO behaviour would have been similar for any security whose price is rising. This aggressive migration signals a notable departure from structured asset allocation,' Shami said. The firm's analysis found that gold ETF AUM growth has significantly outpaced equity fund growth even after adjusting for the returns generated by the underlying asset classes — a signal that net new money, not just price appreciation, is flowing into gold.
Concerns About Overallocation
OmniScience Capital flagged that gold's share — at roughly 47% of large-cap fund assets — appears 'overstretched and warrants caution.' Shami urged investors to reassess their portfolios and moderate their return expectations. While the firm maintained a positive long-term outlook on gold, it questioned the assumption that gold prices, inflation, and interest rates would all rise simultaneously in the years ahead. This kind of multi-variable bullish alignment, critics argue, is rarely sustained for extended periods.
What Could Cap Gold's Upside
The report also raised a structural risk: central bank purchases — a key pillar supporting gold prices in recent years — may not be sufficient to push prices materially higher if other large investors rotate into fixed-income instruments offering more attractive yields. According to the firm, increasing allocations to short- and medium-duration debt could offset demand from official buyers and help keep global gold prices in check. This comes amid a broader global debate about whether the rally in gold has been driven by genuine safe-haven demand or speculative positioning.
What Investors Should Consider
Financial planners generally recommend reviewing gold allocations whenever the asset class outperforms significantly, to guard against unintended concentration. The OmniScience Capital report adds institutional weight to that cautionary note. With gold prices having appreciated sharply over the past three years, the risk of mean reversion — and of latecomers bearing the correction — merits attention. Investors overweighted in gold relative to their target allocation may benefit from a phased rebalancing into equities or duration debt.
Point of View
The structural imbalance becomes a systemic risk, not just an individual portfolio problem. The uncomfortable question mainstream coverage glosses over is this: how much of gold's recent AUM growth reflects genuine diversification versus retail investors who discovered gold only after its price doubled? If it is the latter, the correction risk is concentrated in the hands of those least equipped to absorb it.
NationPress
6 Nov 2026
Frequently Asked Questions
Why are gold ETF folios growing so fast in India?
Gold ETF folios have grown 2.6 times since September 2023, primarily because investors are chasing the rally in gold prices rather than following structured asset allocation strategies, according to OmniScience Capital. The firm characterises this as FOMO-driven behaviour that mirrors how investors react to any sharply rising asset.
How large are gold ETFs compared to large-cap equity funds in India?
Gold ETF AUM has reached nearly ₹1.9 lakh crore, equivalent to roughly 47% of the approximately ₹4 lakh crore managed by large-cap equity funds. OmniScience Capital says this ratio appears overstretched relative to standard allocation frameworks.
How much gold should investors ideally hold in their portfolio?
Standard asset allocation frameworks recommend limiting gold to 5–10% of a portfolio, with the broader alternatives bucket — including private equity, structured debt, SIFs, REITs, and InvITs — capped at around 10–20%. The current level of gold ETF holdings in many Indian portfolios reportedly exceeds these guidelines.
Could gold prices fall from current levels?
OmniScience Capital has cautioned that the factors driving gold higher — including central bank purchases and expectations of simultaneous rises in inflation, interest rates, and gold prices — may not persist. If investors rotate into short- or medium-duration debt offering attractive yields, demand pressure on gold could ease and prices could stabilise or decline.
What should investors do if they are overweight in gold ETFs?
OmniScience Capital's Ashwini Shami urged investors to reassess their portfolios and moderate return expectations. Financial planners generally recommend phased rebalancing into equities or fixed-income instruments when a single asset class has grown well beyond its target allocation due to price appreciation.
