Portfolio allocation guides Indian investors through gold and silver ETF inflows amid geopolitical tensions

Record inflows into gold and silver ETFs, alongside rising geopolitical strain, are reshaping near-term investor behaviour. Yet the core discipline for long-term wealth stays the same. Investors in India are expected to keep a steady asset allocation and review portfolios at planned intervals. This approach reduces the risk of reacting to noise from global events and market swings.

In a discussion with Goodreturns, Aditya Mulki, CEO of Navi AMC, spoke about portfolio checks, scheme switches, and handling uncertainty. The context includes the US-Iran conflict, the wider Middle East crisis, and the US tariff dispute. Mulki also addressed what gold and silver exposure means for long-term plans, without losing sight of equity goals.

Gold and silver ETF inflows hit a record in January, rising to Rs 240.4 billion. The figure was more than double the prior month. In February, gold ETF inflows cooled somewhat, yet demand stayed firm. At the same time, Indian equity mutual fund net inflows fell nearly 14.35% in January, raising questions about equity preferences.

Mulki did not see the precious metals trend as a lasting threat to equities. "We do not think it poses a structural concern for markets as having some precious metals in the portfolio is recommended, and as long as the exposure does not take the asset allocation completely off track, investors should keep their allocations. Investors should avoid performance chasing attitudes and invest in them simply because they are amongst last years best performers," said Mulki.

Key data points discussed are summarised below for quick reference.

Indicator	Period	Detail
Gold and silver ETF net inflows	January	Rs 240.4 billion, more than doubled month-on-month
Gold ETF inflows	February	Moderated versus January, interest remained strong
Indian equity mutual fund net inflows	January	Down nearly 14.35%
Sensex move	Past five trading sessions	Down nearly 3.5%
Nifty move	Past five trading sessions	Down around 1.5%

Market volatility increased as US-Israel air strikes on Iran heightened Middle East tensions. Over the past five trading sessions, Sensex fell nearly 3.5%, while Nifty slipped around 1.5%. Such events often pressure sentiment and global risk appetite. Mulki stressed that investors are better served by sticking to their chosen mix of assets.

"Investors cannot control global events, but they can control how much of their money is allocated to stocks, fixed income instruments, precious metals and real estate."

"While it is tempting to chase high returns or hide in cash, retail investors should prioritise asset allocation above all else. Investors should focus on their plan and get their asset allocation right."

Mutual fund portfolio review with asset allocation, gold ETF context

Mulki said portfolio checks should be limited and purposeful. "Once or twice every year should suffice. Checking more often leads to stress and bad choices based on short-term sentiments. One thing investors must look at is the portfolio overlap between the various schemes they hold. If the schemes an investor holds have a high overlap consistently, then they must consider investing in a scheme with a different style," explained Mulki.

When investors consider switching schemes, Mulki pointed to fund management signals rather than recent returns. "An investor needs to monitor a fund for style drift. Another metric to track is the active share, which is how different the fund's portfolio is as compared to its benchmark," said Aditya Mulki. Style drift means the fund departs from its stated approach, such as large-cap shifting into mid-cap.

"A high active share indicates that the fund manager is taking active bets and not closet indexing in the fund. It does not guarantee outperformance, but it suggests the fund manager is taking bets with conviction," he added. Active share ranges from 0% to 100%. It shows how far a portfolio differs from its benchmark index, which may support outperformance.

Across metals, equities, and debt, the common message was consistency. Gold and silver can play a supporting role, especially during risk events, but they should not overturn the planned mix. Regular reviews, overlap checks, and monitoring style drift and active share were presented as practical steps. These measures keep portfolios aligned with long-term goals despite uncertain global headlines.