Silver exchange-traded funds recorded their highest-ever monthly net inflow of ₹4,286 crore in June, ending four months of consecutive outflows. Investors used the recent price correction as a buying opportunity, though total assets under management fell due to the drop in underlying silver prices.
Investors showed strong renewed interest in silver exchange-traded funds (ETFs) during June, pouring a record ₹4,286 crore into these instruments. This significant activity marks a sharp reversal after four straight months of withdrawals from the category. The surge in investment reflects a trend where retail investors treated the recent dip in global silver prices as a chance to increase their holdings in precious metals.
Price Correction Impacts Valuation
While the inflows reached record levels, the total assets under management (AUM) for silver ETFs actually moved lower in June. The AUM decreased to ₹78,943 crore, down from ₹86,217 crore in May. This decline in value is primarily due to mark-to-market losses, which occur when the market price of the physical silver held by these funds drops. Essentially, even as more money was added to the funds, the lower price of the silver they already held reduced the overall value of the portfolio. Despite this decline in valuation, retail interest remained high, with the number of investor folios in silver ETFs climbing to 53.93 lakh.
Gold ETFs and Market Context
Gold ETFs followed a similar pattern, attracting ₹3,443 crore in net inflows during the same period as bullion prices softened. Market analysts point to persistent geopolitical tensions and the global financial environment as key reasons why investors continue to turn to precious metals as a way to protect their portfolios. Additionally, expectations that central banks in major economies may eventually cut interest rates continue to make non-interest-bearing assets like gold and silver more appealing to long-term investors.
Broader Mutual Fund Trends
Beyond precious metals, the passive fund category—which includes ETFs and index funds—saw total net inflows of ₹16,724 crore in June. A large portion of this, amounting to ₹13,238 crore, went into other exchange-traded funds, while index funds faced a small net outflow of ₹59 crore. The broader mutual fund industry in India continues to see stable growth, with assets under management rising by 0.79 percent to reach a total of ₹82.22 lakh crore. Notably, equity mutual funds sustained their popularity, recording net inflows for the 64th month in a row, totaling ₹28,973 crore for June. Investors tracking these trends in the coming months will likely focus on whether silver prices stabilize and if the current inflow trend in passive funds persists alongside continued investments in active equity schemes.