New Delhi, April 15 (NationPress) While physical gold continues to dominate, the digital realm is witnessing a remarkable rise in the popularity of gold exchange-traded funds (ETFs). These investment vehicles have become increasingly favored by both retail and institutional investors, with total assets under management (AUM) climbing to Rs 1,71,468.4 crore in March 2026, marking a near tripling year-on-year, according to a report released on Wednesday.

According to an analysis by ICRA Analytics, the AUM figure indicates a robust five-year compound annual growth rate (CAGR) of 64.76%, up from Rs 14,122.72 crore in March 2021.

Year-over-year, net AUM surged 191.18% from Rs 58,887.99 crore in March 2025, highlighting the accelerated momentum of gold-linked investments in India.

Furthermore, net inflows into gold ETFs reached Rs 2,265.68 crore in March 2026, a significant turnaround from net outflows of Rs 77.21 crore during the same month last year. In contrast, inflows were more modest at Rs 662.45 crore in March 2021.

However, comparing month-on-month figures, inflows saw a considerable decline of 56.88% from Rs 5,254.95 crore in February 2026, as gold prices experienced a short-term correction and global risk sentiment temporarily improved.

ICRA Analytics' Senior Vice President and Head of Market Data, Ashwini Kumar, cited the surge in investor interest to the combined effects of global uncertainty and strong gold price performance.

"Gold ETFs have clearly gained preference amid heightened geopolitical volatility and substantial gold price appreciation, with both retail and institutional investors actively using them as a tactical allocation within their portfolios," he explained.

"This trend has been fueled by the dual influence of global uncertainty and impressive returns from gold, reinforcing its traditional status as a safe-haven asset," he added.

Currently, there are 26 gold ETF schemes available in the market, including six launched in the financial year 2025-26.

The average one-year returns across most funds range from approximately 58.81% to 62.85%, while five-year CAGR returns fall between 25.78% and 26.11%.

Despite the month-on-month decrease in inflows, Ashwini Kumar affirmed that investor commitment to this asset class remains fundamentally strong.

"Even amidst short-term corrections, Gold ETFs continue to hold investor relevance. Although inflows dropped sharply in February and March 2026 due to gold price adjustments and a temporary reduction in global risk aversion, the flows remained positive, indicating sustained interest from investors," he stated.

Ashwini Kumar also differentiated between ETF-based and physical gold investments, advocating for ETFs as a superior financial instrument.

"Gold ETFs are more suitable for investment, portfolio diversification, and tactical asset allocation, while physical gold is better for consumption and long-term holding influenced by cultural preferences. For most financial investors, Gold ETFs provide a more streamlined, efficient, and transparent way to gain exposure to gold prices," he concluded.