Gold ETFs become Corporate safe haven as hedge against uncertainty

Wed July 02 2025

As gold has been a traditional store of wealth for Indian households, it’s now becoming a favourite of India Inc—only this time, in digital form. Corporate investors are increasingly turning to gold exchange-traded funds (ETFs) to protect capital, diversify portfolios, and manage risk.

According to reports, corporate assets under management (AUM) in gold ETFs have grown 55 percent annually over the past five years, reaching Rs 36,154.5 crore by March 2025. This growth coincided with an 86 percent surge in global gold prices.

As a result, corporates now hold 61.4 percent of the total gold ETF AUM, up from 50 percent in March 2020.

Retail investors, while still active, saw their share decline to 7.5 percent from 16.1 percent over the same period. Still, the number of retail folios rose 37 percent year-on-year in 2025, and their AUM grew 39 percent to Rs 4,440 crore.

This shift reflects a broader trend. Corporates, which traditionally invested in liquid funds for short-term safety, are now embracing gold as a hedge against inflation and geopolitical uncertainty, especially with prices crossing Rs 1 lakh per 10 grams in June 2025.

Many retail investments in gold also come through Fund of Funds (FoFs) or multi-asset funds, which invest in gold ETFs. These are technically counted as “corporate” AUM since the mutual fund holds the ETF units.

New tax rules from July 2024 also helped boost flows. Long-term capital gains on gold and equity-oriented FoFs are now taxed at 12.5 percent if held over two years, making gold more attractive for both individuals and institutions.

Source: https://www.moneycontrol.com/