Gold ETF Folios Have More Than Doubled in 2 Years. Why Indians Are Buying Gold Differently

In January 2026, Indian Gold ETFs received net inflows of nearly ₹24,040 crore. That was marginally more than the ₹24,029 crore that entered all growth and equity-oriented mutual fund schemes during the same month.

One relatively small mutual fund category attracted as much money in a month as the entire equity fund industry. But January was exceptional, and its record inflow should not be treated as a new monthly run rate.

Interest had already been building. Gold ETFs received ₹11,647 crore in December 2025, which was itself a record at the time. The bigger question, therefore, is whether this was just a rush towards a fast-rising asset or evidence of a deeper change in how Indians are using gold.

The clearest answer does not come from gold prices alone. It comes from the number of Gold ETF folios, which has more than doubled in only 2 years.

Gold ETF Growth Is Bigger Than One Exceptional Month

AMFI data shows how quickly the category has expanded.

Between July 2024 and July 2026, folios increased by approximately 127%. Over the latest year alone, they grew by roughly 59%. These figures are based on AMFI monthly category reports for July 2024, July 2025 and July 2026.

Folios help show whether participation is spreading. AUM shows the current value of the category, but rises both when investors add money and when gold prices increase. The fivefold increase in AUM therefore does not mean investors contributed five times as much money.

First, What Does a Mutual Fund Folio Mean?

A folio is an account or record created for an investment with a mutual fund. The investor's units and transactions are recorded under it.

However, 1 folio is not the same as 1 unique investor. The same person may hold Gold ETFs from different fund houses and have multiple folios.

Therefore, the July 2026 number should be described as 1.253 crore Gold ETF folios, not 1.253 crore Gold ETF investors. AMFI's data does not tell us exactly how many unique people are behind those accounts.

The number is still valuable. Growth of more than 2 times in 2 years indicates much wider participation, even though it cannot provide an exact investor headcount.

The ₹1.38 Lakh Per Folio Surprise

Gold ETFs had AUM of ₹1,73,301 crore and 1,25,33,029 folios at the end of July 2026. Dividing one by the other gives average AUM of approximately ₹1.38 lakh per folio.

That is lower than the average for several mutual fund categories with large folio bases.

Gold ETFs therefore had the smallest average AUM per folio among mutual fund categories with more than 1 crore folios. They did not have the smallest average across the industry. Children's Funds were at roughly ₹84,000 and Retirement Funds at around ₹1.07 lakh per folio, while ₹1.38 lakh is not an average investment amount.

Average AUM Is Not the Average Amount Invested

Suppose an investor puts ₹80,000 into a Gold ETF. If gold prices later lift the value of those units to ₹1.2 lakh, AMFI will count ₹1.2 lakh as AUM. The original investment is still ₹80,000, but the current asset value is higher.

Average AUM per folio is simply the current value of the category divided by its folios. It is not the average purchase amount, average cost or average wealth of a unique investor.

One person can have several folios, older accounts have benefited from price appreciation and the category can include non-retail holdings. The low average supports the idea of broad, retail-style participation, but does not prove that every holder is a small retail investor.

Why Are Indians Buying Gold Differently?

Indian households have traditionally purchased gold as jewellery, coins and bars for weddings, festivals, gifts and long-term savings.

Gold ETFs allow an investor to place gold inside a financial portfolio without buying an ornament or keeping a bar at home. The purpose is price exposure, not a physical item to wear or gift.

Several forces came together to accelerate this shift.

First, gold delivered an unusually powerful rally. The World Gold Council reported that the international gold price gained 67% in 2025, its strongest calendar-year increase since 1979. It also said that domestic prices broadly followed the rally, while rupee movements influenced the return earned by Indian investors. World Gold Council data shows that 2025 Indian Gold ETF inflows reached a record ₹43,000 crore and folios grew about 60% during the year.

A rising asset attracts attention. Geopolitical uncertainty, inflation concerns, a softer rupee and periods of subdued equity performance also strengthened gold's appeal as a diversifier.

As more Indians became comfortable with demat accounts and online brokerages, buying Gold ETF units also became easier. Investors could purchase small quantities, see market prices and sell through the exchange without arranging storage or checking purity.

These factors reinforced each other. Strong returns drew attention, uncertainty encouraged diversification and digital access simplified buying. This does not mean Indians stopped valuing physical gold. It means they gained another way to use gold specifically as a portfolio allocation.

How Does a Gold ETF Work?

A Gold ETF is a mutual fund scheme whose units trade on a stock exchange. Instead of buying a coin or bar, the investor buys units through a demat and trading account.

The scheme invests mainly in physical gold and permitted gold-related instruments. Its net asset value, or NAV, broadly follows domestic gold prices after costs and tracking differences. Market makers help keep the exchange price close to NAV, although the 2 may differ temporarily.

When comparing Gold ETFs, past returns should not be the only filter. Investors should understand 4 basic terms.

• Expense ratio: The annual fee charged by the fund. It reduces the return available to the investor.
• Tracking difference: The gap between the ETF's return and the return of its gold benchmark over a period. Expenses, cash holdings and operational factors can create this gap.
• Liquidity: How easily units can be bought or sold on the exchange without meaningfully affecting the price.
• Bid-ask spread: The difference between the best available buying price and selling price. A wider spread can quietly increase the cost of trading.

Two Gold ETFs can follow the same asset yet differ in costs, tracking quality, liquidity and spreads.

Gold ETF vs Physical Gold

The choice depends on why the investor wants gold. One form is not universally better than the other.

An ETF cannot replace a wedding ornament or physical gift. But for measurable portfolio exposure, it can be more convenient and transparent. Gold is now entering household wealth through demat accounts as well as jewellery boxes.

Folios, Inflows and AUM Tell Different Stories

Three numbers are often used interchangeably in reports about mutual funds, even though they answer different questions.

Folio growth indicates whether the number of investment accounts is increasing. It is the most useful of the 3 when studying whether participation in a product is widening.

Net inflow is fresh money received during a period minus the money redeemed. A category can have strong inflows in one month and an outflow in the next.

AUM growth shows the change in the market value of all assets managed by the category. It reflects both net investor flows and the movement in asset prices.

If a Gold ETF starts with ₹10,000 crore, receives ₹1,000 crore of net inflows and its existing gold rises in value, ending AUM can increase by much more than ₹1,000 crore. The full increase is not new investor money.

This is why the 3 measures work best together. The folio count shows spreading adoption, net flows show the intensity of buying and AUM shows the scale of assets after market movements.

January Was Historic, but Monthly Demand Is Volatile

The flow cycle began accelerating well before January. Monthly net inflows rose from ₹2,190 crore in August 2025 to ₹8,363 crore in September and ₹7,743 crore in October. They moderated to ₹3,742 crore in November before jumping to ₹11,647 crore in December and ₹24,040 crore in January.

January marked the ninth consecutive month of positive flows. The World Gold Council estimated that the 25 ETFs then available held about 110 tonnes after adding a record 15.5 tonnes during the month. Its February market update also noted that 12 lakh folios were added in January alone.

But the months that followed show why one record should not be projected indefinitely. Net inflows fell to ₹5,255 crore in February, ₹2,266 crore in March and ₹3,040 crore in April. May recorded a net outflow of ₹725 crore, followed by inflows of ₹3,443 crore in June and ₹1,559 crore in July.

Folios were still 9 lakh higher in July than at the end of January, even though monthly buying cooled dramatically. The structural story is wider product use, not the assumption that every month will resemble January.

Why Did Gold ETF AUM Rise Almost Fivefold?

Gold ETF AUM increased from ₹34,455 crore in July 2024 to ₹1,73,301 crore in July 2026, a rise of about 403%. Three forces determine that value, fresh purchases, redemptions and changes in gold prices.

Strong flows during the second half of 2025 and January 2026 brought substantial fresh money. Yet the global gold price's 67% gain in 2025 and further rise in early 2026 also increased the rupee value of existing units.

The path was not one-way. AUM moved from ₹1.84 lakh crore in January to ₹1.71 lakh crore in March, ₹1.85 lakh crore in May and ₹1.73 lakh crore in July. Market prices can lift or reduce AUM even while the account base expands.

The folio, flow and AUM data together therefore tell a more useful story. Indians added accounts, committed fresh money and benefited from price appreciation. No single one of those factors explains the entire increase.

Gold ETFs Are Mainstreaming, but They Are Not Replacing Equity

India's mutual fund industry had total AUM of ₹85.76 lakh crore in July 2026, according to AMFI's July monthly note. Gold ETFs represented about 2% of that total.

That share has risen substantially, but remains small beside the ₹38.36 lakh crore held in equity-oriented schemes. Investors are not abandoning equities. Gold is earning a larger place alongside equity and debt.

There is evidence of a broader diversification trend. Multi Asset Allocation Fund folios increased from approximately 24.3 lakh in July 2024 to 58.7 lakh in July 2026, while AUM rose from about ₹89,593 crore to ₹2.03 lakh crore. AMFI also reported that these funds completed their 59th consecutive month of positive flows in July 2026.

Multi Asset Allocation Funds, Gold Fund of Funds, Silver ETFs and Gold ETFs are separate categories and their numbers should not be combined. Still, growth in multi-asset funds and Gold ETFs suggests more interest in diversification.

What Should Investors Learn From the Gold ETF Boom?

The first conclusion is reasonably strong. Gold appears to be becoming more mainstream as a financial investment. A rise from about 55 lakh to more than 1.25 crore folios in 2 years is too large to dismiss as only a change in gold's market value.

The second conclusion requires more caution. Growing popularity does not automatically make gold attractive at every price. An asset can become most popular after it has already delivered unusually high returns.

Gold can diversify a portfolio because its performance drivers differ from equities and bonds. But it does not generate profits or cash flows. Returns depend on global prices, currency movements, interest-rate expectations and safe-haven demand.

Investors should also remember that gold can correct sharply. January itself offered an example, with international prices hitting new highs and then falling quickly near the end of the month. A strong long-term adoption trend does not remove short-term price risk.

Before using a Gold ETF, an investor should consider the purpose, allocation, goals and tolerance for volatility. Expense ratio, tracking difference, liquidity and bid-ask spread also matter. Recent returns are not a sufficient selection framework.

The deeper change is not that Indians are giving up physical gold or replacing equity. It is that gold is gaining a second identity inside household wealth. Alongside jewellery, coins and bars, it is increasingly being held as a measurable, exchange-traded portfolio allocation.

Gold ETFs made that shift easier. The rapid expansion in folios shows that the behaviour is becoming mainstream, but the record flows and powerful price rally should not be mistaken for a promise of future returns. The sensible lesson is to treat gold as an allocation decision, not an excitement decision.