Investors, who were rushing to take advantage of rising silver prices through exchange-traded funds (ETFs), booked profits in February after the price of the white metal fell over 20% during the month.
Consequently, silver exchange-traded funds (ETF), which were seeing record inflows in recent months, saw its first net outflows of Rs 826 crore in over two years in February – a first since November 2023, according to data from the Association of Mutual Funds in India (Amfi). This happened after a period of steady inflows throughout 2025, with the highest net inflow figure of Rs 9,463 crore recorded in January.
Retail Sentiment
However, market experts believe that this is only a small blip because the overall interest in silver has not gone down significant. In fact, as Vandana Trivedi, head of passives, Axis Mutual Fund pointed investor interest in silver has continued to broaden as indicated by the rise in number of investor folios in silver ETFs from 4.78 million in January 2026 to 5.41 million – a rise of 13% — in February 2026 and the number of new schemes launched by fund houses in the category.
Vikram Dhawan, head commodities and fund manager, Nippon India Mutual Fund explained that retail investors tend to respond more actively to price volatility and sentiment, which can lead to periodic fluctuations in flows like the one witnessed last month.
He also gave other reasons for the sell-off: profit booking by investors after the strong rally in precious metals over the past year and the seasonal patterns in global demand of precious metals. He said that taken together, these factors can lead to short-term variability in flows without necessarily indicating any structural shift in investor interest.
Silver prices were also on the boil, rising to Rs 3.36 lakh per kg in January. It fell 20.2% in February to Rs 2.66 lakh per kg. The assets under management of silver ETFs was Rs 91,975 crore in February-end.
Strategic Asset Allocation
Chintan Haria, principal – investment strategy, ICICI Prudential AMC advises investors to not take tactical bets in precious metals and instead, make them a part of a broader asset allocation strategy, following a staggered approach. “During such periods, precious metals like silver typically remain out of favour and exhibit gradual price movement,” he added.
Manuj Jain, co-founder of ValueMetrics Technologies attributed the outflows to the over 30% correction in silver prices in recent months which unsettled investor sentiment. He sees this sell-off as a reflection of common behavioral pattern of investors gravitating toward asset classes that have delivered strong recent returns and making redemptions during periods of sharp volatility or sudden drawdowns.