India’s passive fund turnover saw a major shift in FY26, with gold and silver ETFs accounting for nearly 60% of total volume. Total assets in passive funds reached ₹14.82 trillion by June 2026, as investors increasingly favor precious metals over traditional equity options.
Detailed Coverage
The Indian passive investment market has undergone a significant transformation, with exchange-traded funds (ETFs) seeing a dramatic rise in trading activity. Data for the financial year 2026 reveals that total daily average turnover for these funds reached ₹4,577 crore. This represents a substantial climb from ₹237 crore in FY21, illustrating how quickly investors have moved toward passive products for their portfolios.
Surge in Commodity-Based Investing
The most notable trend in this period has been the dominance of commodity ETFs, specifically those tracking gold and silver. This category experienced a sharp acceleration in trading volume, moving from ₹224 crore in FY25 to ₹2,907 crore in FY26. Consequently, commodity ETFs now represent nearly 60% of the total ETF turnover in the country. This shift highlights a strong appetite among Indian investors for precious metals as a hedge or a strategic asset, moving beyond the traditional preference for equity-linked passive funds.
Growth Across Passive Asset Classes
While commodities have taken center stage, debt ETFs have also carved out a larger share of the market. Trading activity in debt-focused passive products has grown steadily, climbing from ₹107 crore in FY21 to over ₹1,000 crore in the most recent quarter. This indicates that investors are diversifying their passive holdings, seeking stability in debt instruments alongside the tactical exposure offered by precious metal funds.
Total Industry Assets and Flows
The broader passive fund industry continues to expand, with total assets under management reaching ₹14.82 trillion as of June 2026. Financial data shows that investor interest remains robust, with net inflows into passive schemes totaling ₹34,641 crore during the first quarter of FY27. Gold ETFs were a primary contributor to this growth, capturing ₹68,868 crore in net inflows during FY26, while silver ETFs attracted ₹30,412 crore.
For investors, the key monitorable going forward will be whether this high concentration in precious metal ETFs persists. While passive funds offer lower costs and transparency, heavy reliance on commodity-based ETFs can expose portfolios to the inherent price volatility of gold and silver. Investors may watch how these funds perform if precious metal prices undergo a correction, as the liquidity and turnover in these ETFs are directly tied to investor sentiment regarding global commodity cycles and inflation expectations.