Gold ETFs Shine Brighter Than Liquid Funds for Corporates in 2025

Gold has always held emotional and financial value in Indian households. But now, Indian corporates are increasingly turning to gold—not in its physical form, but through paper-based investments like Gold Exchange Traded Funds (ETFs). As gold prices skyrocketed over the last five years, corporate interest in gold ETFs has surged, indicating a significant shift in institutional investment strategies.

According to Value Research data cited by The Economic Times, corporate assets under management (AUM) in gold ETFs grew at a staggering 55% annually, reaching ₹36,154.5 crore by March 2025. This comes during a period when global gold prices jumped 86% in dollar terms per troy ounce.

Why Corporates Are Bullish on Gold ETFs

• Surging Gold Prices: The remarkable rise in gold prices over the past year has drawn corporates, family offices, trusts, and institutions toward gold investments.
• Rising Corporate Share in AUM: Corporate share in total Gold ETF AUM soared to 61.4% in 2025, up from 50% in March 2020.
• Retail Share Declines: In contrast, individual investors' share in gold ETF AUM dropped from 16.1% in 2020 to 7.5% in 2025.
• Retail Participation Grows in Numbers: Despite the shrinking share, retail folios rose 37% YoY, reaching 6.8 million, and their AUM rose 39% to ₹4,440 crore in 2025.

Gold as a Portfolio Diversifier: Traditionally, corporates relied on liquid and money market funds for cash management due to their safety and no exit-load structure. But with growing geopolitical uncertainties and market volatility, gold ETFs are emerging as a preferred diversification tool.

“Institutions are now more actively allocating to gold as part of diversified strategies aimed at managing risk and preserving capital,” said Vikram Dhawan, Head of Commodities at Nippon India Mutual Fund. “This reflects growing institutional confidence in Gold ETFs as a transparent and efficient route for gold exposure within a regulated structure.”

Gold Hits Record Highs

Gold prices in India crossed a historic ₹1 lakh per 10 grams in June 2025, driven by heightened global political instability. Earlier, by March 2025, 24-carat gold had already reached ₹89,000 per 10 grams, a sharp 30% rise from ₹69,000 in 2024.

FoFs and the ‘Corporate’ Tag in AUM

Interestingly, the surge in corporate AUM also stems from how mutual fund investments are categorized. Gold Fund of Funds (FoFs)—a popular investment route for retail investors—are classified as "corporate" AUM in mutual fund records. This is because the FoFs, operated by AMCs (Asset Management Companies), hold ETF units directly.

“The AUM data largely reflects corporate investments because retail investors typically invest in gold via FoFs, which in turn invest in Gold ETFs,” explained Niranjan Avasthi, Senior VP at Edelweiss AMC.

Additionally, multi-asset funds, another preferred choice among investors, often allocate a portion of their portfolio to gold ETFs. If an AMC doesn’t have its own gold ETF, it channels investments into other AMCs’ ETFs—further inflating corporate AUM in those products.

Tax Benefits Boost Retail Interest in Gold FoFs

Retail participation in gold FoFs received a boost since July 2024, after the government announced favorable tax changes. As per the Union Budget, gold and equity-oriented FoFs held for over 24 months now attract a 12.5% long-term capital gains tax—a move that made gold investing more tax-efficient for retail investors.

As global uncertainties rise and gold prices continue their upward momentum, both corporates and retail investors are increasingly leaning toward gold ETFs for wealth protection and portfolio diversification. While corporates dominate the AUM share, the rising number of retail folios shows that the appeal of paper gold is far from limited to big institutions.