Flows Favor Equities, Returns Reward Gold & Silver

Over the last 12 months, investors have witnessed a sharp divergence in asset class performance. Precious metals have emerged as the quiet winners, while equities have struggled to hold ground.

• Gold surged 46.71%.
  
  
• Silver delivered an even stronger 47.08% gain.
  
  
• In contrast, the Nifty 50 slipped 2.90%, erasing wealth instead of compounding it.
  
  

This stark contrast highlights where the real returns have been hiding—gold and silver, not equities.

Investor Behavior: The Paradox

Despite these returns, mutual fund investors in India remain overwhelmingly equity-biased.

• India’s mutual fund AUM stands at a record ₹77 lakh crore.
  
  
• Out of this, Gold ETFs account for just ₹66,660 crore and Silver ETFs for ₹22,160 crore.
  
  
• Combined, precious metals make up a mere 1.15% of total MF AUM.
  
  

This underlines a paradox: the asset classes generating the highest returns remain under-owned, while the bulk of inflows chase equities.

Equity Flows Remain Resilient

• According to AMFI data, equity inflows hit ₹42,702 crore in July 2025, an all-time high.
  
  
• SIP contributions continue to scale new peaks, showing retail investors’ unshaken faith in equities, despite negative returns from Nifty in the past year.
  
  

This reflects the structural shift toward equity investing in India, driven by the long-term compounding narrative.

Key Takeaway: Asset Allocation Matters

The message is not to abandon equities. Equities remain the wealth creators for the long haul. But the past year has been a timely reminder that asset allocation is the true risk manager.

• Gold and silver offer hedging benefits during volatile or weak equity cycles.
  
  
• A judicious allocation to precious metals can provide both performance and protection, ensuring portfolios remain balanced.
  
  

📌 Bottom Line: While flows continue to chase equities, the real returns of the past year have come from gold and silver. Investors who ignored metals missed an important opportunity for diversification. Going forward, maintaining a balanced portfolio with equities, gold, and silver could be the smarter strategy.