Investor allocations to gold exchange traded funds saw a significant moderation in February 2026 following the unusually strong inflows recorded a month earlier. Data released by the Association of Mutual Funds in India showed that Gold ETFs attracted inflows of about ₹5,255 crore in February, sharply lower than the ₹24,039.96 crore recorded in January. The earlier surge had been one of the largest monthly inflows into the category and had pushed gold ETF investments close to equity mutual fund inflows, reflecting strong investor appetite for safe haven assets amid global financial uncertainty and volatile equity markets.

The sharp drop in February inflows does not necessarily indicate a reversal in investor sentiment toward gold. Instead, it appears to represent a cooling period after aggressive portfolio allocations at the start of the year. Investors often rebalance portfolios following large allocation cycles, particularly when gold prices remain elevated or when equity markets stabilise temporarily.

Industry observers note that the January spike may have been driven by a combination of geopolitical uncertainty, global interest rate expectations, and risk aversion among retail and institutional investors.

Across the broader passive fund ecosystem, inflows also moderated in February. Total inflows into passive investment categories including index funds, exchange traded funds, gold ETFs and overseas fund of funds stood at around ₹13,879 crore during the month. This was significantly lower than the record ₹39,954 crore seen in January but remained higher than the approximately ₹11,000 crore recorded in December. The data suggests that passive investing continues to maintain structural traction in India even as monthly flows fluctuate depending on market conditions and asset allocation cycles.

Index funds continued to attract steady investor interest, drawing inflows of about ₹3,233 crore during February. These funds typically mirror benchmark indices and have gained popularity among long term investors due to their lower expense ratios and transparent portfolio structure. The sustained interest in index funds reflects the broader shift among Indian investors toward low cost passive investment strategies.

Other exchange traded funds also saw inflows of approximately ₹4,487 crore during the month. Meanwhile, funds of funds that invest in overseas markets recorded inflows of about ₹904 crore. Although global investment flows remain subject to regulatory limits and currency considerations, the category continues to see gradual investor participation as Indian investors seek geographic diversification.