Investors continue to favour passive investment products, while gold ETFs remain a key area of demand amid market uncertainty.
India’s passive investment segment continued to attract money in August, although the pace of inflows moderated compared with the previous month. The trend comes as investors increasingly use exchange-traded funds (ETFs) and index funds as part of diversified portfolios, while gold ETFs continue to draw attention amid elevated gold prices and global uncertainty.
This latest move comes amid a broader expansion of passive investing in India. According to the AMFI-Crisil Intelligence Factbook 2026, passive fund assets under management (AUM) reached ₹13.73 lakh crore in March 2026, up sharply from ₹4.25 lakh crore in March 2021.
Gold ETFs remain in focus.
Gold has emerged as one of the stronger segments within passive investments. Gold ETFs attracted ₹69,000 crore during FY26, reflecting sustained demand as investors looked to diversify portfolios amid geopolitical and economic uncertainty.
The sharp rise in gold prices has also supported the preference for gold ETFs. Unlike physical gold, ETFs let investors participate in gold price movements without storing the metal themselves. Recent data show that demand has remained positive even as monthly inflows have fluctuated. Gold ETFs attracted ₹3,443 crore in June before inflows moderated to ₹1,559 crore in July. The July figure nevertheless marked a second consecutive month of positive flows.
Index funds gain ground.
The broader passive-fund landscape is also changing. Index funds have expanded rapidly in recent years, with their share of total passive AUM increasing from 6.2% in March 2021 to 22.4% in March 2026. Among retail investors, the shift has been even more pronounced. Index funds accounted for 55% of retail passive AUM in FY26, compared with just 11.5% five years earlier.
Meanwhile, the share held through other ETFs declined significantly. The change suggests that passive investing is no longer limited primarily to large institutional investors. High-net-worth individuals have also increased their participation, with their share of passive fund AUM rising from 6.6% in March 2021 to 19.9% in March 2026. Passive fund growth also appears to be accompanied by longer holding periods. The share of passive AUM held for less than a year dropped from 79.8% in March 2021 to 39.6% in March 2026.
At the same time, investments held for one to five years rose to 49.2%, suggesting more investors may be viewing index funds and ETFs as longer-term portfolio components rather than short-term trading instruments.
