Investors Shift from ETFs Amid Volatile Markets

Exchange-Traded Funds (ETFs) and Index Funds are both popular investment vehicles, but they differ significantly in structure and trading methods. ETFs are traded like shares on stock exchanges, allowing real-time buying and selling, while Index Funds are only traded once at the end of the trading day, making them less flexible. Recent trends show that Indian investors are increasingly turning to these passive investment options amid volatile equity markets, although the share of money in ETFs has seen a decline recently, attributed to short-term market conditions. Experts believe that the decrease in ETF market share does not indicate a lasting trend, as passive investment strategies remain stable overall. Notably, gold ETFs have attracted significant inflows, diverting funds from traditional ETFs. As of January 2025, the ETF market share in total assets under management has dropped slightly, reflecting shifting investor preferences rather than a fundamental downturn.