Whalesbook
India's ETF Market Surpasses Monumental ₹10 Lakh Crore Milestone
The Indian Exchange Traded Fund (ETF) industry has achieved a significant landmark, with its total Assets Under Management (AUM) crossing the ₹10 lakh crore mark as of October 2025. This impressive figure represents a doubling of the industry's AUM over the past three years alone, underscoring a powerful shift in investor preferences towards cost-effective and transparent investment vehicles.
Explosive Growth in Trading Activity
Zerodha Fund House highlighted that the ETF ecosystem has not only grown in size but also in vibrancy. Trading volumes for ETFs have seen a dramatic seven-fold increase, escalating from ₹51,000 crore in the 2019-20 fiscal year to a substantial ₹3.83 lakh crore in FY 2024-25. This surge indicates enhanced market depth and broader participation across various stock exchanges.
The momentum has continued strongly into the current financial year. In the first half of 2025-26, ETF trading volumes already exceeded ₹3.2 lakh crore, nearly matching the entire volume recorded in the previous full year. According to Zerodha Fund House, this heightened liquidity has directly translated into tighter bid-ask spreads, improved price discovery mechanisms, and smoother trade execution for investors.
Retail Investors Drive the Surge
A key factor propelling the growth of the ETF market has been the substantial increase in retail investor participation. The number of ETF investor accounts has grown more than eight-fold over the last five years. This number expanded from approximately 41 lakh folios in November 2020 to over three crore folios by November 2025. This expansion is attributed to greater investor awareness campaigns and significantly improved accessibility through various digital investment platforms.
Vaibhav Jalan, Chief Business Officer at Zerodha Fund House, commented on the accessibility of ETFs. He stated that for new investors, ETFs serve as a flexible instrument to gain exposure to diverse asset classes, themes, and market segments due to their inherent simplicity, cost-effectiveness, and transparent structure.
Diversification Beyond Equities
Equity ETFs continue to hold the dominant position within the segment, attracting approximately 25 lakh new folios in the twelve months leading up to November 2025. However, the report notes a gradual diversification in investor interests. Allocations towards precious metals like gold and silver are increasingly gaining traction.
Collectively, gold and silver ETFs now constitute nearly 15 percent of the total ETF AUM as of November 2025. In the past year alone, the AUM for gold ETFs doubled to surpass ₹1 lakh crore, while silver ETF AUM quadrupled to exceed ₹49,000 crore. This trend highlights a growing investor appetite for diversification within their portfolios.
A Milestone for Indian Finance
Vishal Jain, CEO of Zerodha Fund House, described the achievement as a landmark moment for the Indian ETF landscape. He expressed satisfaction in witnessing the product's maturity and widespread adoption, especially having been involved in launching some of India's earliest ETFs across equity, gold, liquid, and government divestment categories.
Impact:
This milestone signifies a maturing Indian investment landscape where investors are increasingly embracing sophisticated, low-cost financial products. The growth boosts overall market liquidity and signifies growing trust in regulated investment avenues, potentially leading to more efficient capital allocation within the economy. The increasing diversification also points towards enhanced financial literacy among Indian investors.
Impact Rating: 8/10
Difficult Terms Explained:
- ETF (Exchange Traded Fund): An investment fund that holds assets like stocks, bonds, or commodities, and trades on stock exchanges like individual stocks. They typically track an index and offer diversification at a low cost.
- AUM (Assets Under Management): The total market value of all financial assets managed by a financial institution, such as an investment firm or mutual fund company, on behalf of its clients.
- Folios: A unique account number assigned to an investor for holding units of a mutual fund scheme or ETF. Each folio represents an individual investor's holding.
- Spreads: The difference between the buying price (ask) and the selling price (bid) of a security. Tighter spreads mean lower transaction costs for investors.
- Price Discovery: The process by which the market determines the fair value or price of an asset through the interaction of buyers and sellers.
- Diversification: A strategy of spreading investments across various asset classes, industries, or geographic regions to reduce risk. The principle is that different investments may react differently to the same event.