Commodity-Based Mutual Funds Steal the Spotlight in 2025

As 2025 draws to a close, commodity-based mutual funds have emerged as the surprise winners in India’s investment landscape. While benchmark indices like the Sensex and Nifty posted modest year-to-date gains of around 9%, commodity-linked investment products—especially those focused on precious metals—delivered significantly higher returns, outperforming many equity mutual funds.

A one-year performance review of mutual fund schemes across asset classes shows that gold and silver-focused funds dominated return charts, reflecting strong investor interest in safe-haven assets amid global uncertainty.

Silver ETFs and FoFs Lead Performance Charts

Among the standout performers in 2025 were silver-focused Exchange Traded Funds (ETFs) and Fund of Funds (FoFs). Schemes such as:

Aditya Birla Sun Life Silver ETF FoF

ICICI Prudential Silver ETF FoF

Nippon India Silver ETF FoF

reported returns exceeding 130% over the past year, driven by a sharp rally in silver prices in both domestic and global markets.

Navy Vijay Ramavat, Managing Director at Indira Securities, said precious metals clearly dominated mutual fund performance this year. He noted that overseas funds investing in global gold mining companies also benefitted from the sustained uptrend in bullion prices.

“The strong rise in gold and silver supported commodity-based mutual funds across markets,” Ramavat said, adding that multi-asset and hybrid funds with commodity exposure also gained from balanced allocation strategies.

Experts Warn Against Chasing Short-Term Commodity Rallies

Despite the stellar performance, market experts advise caution. Commodities are cyclical by nature and prone to sharp corrections after steep rallies.

According to Ramavat, investors should focus on:

Long-term asset allocation

Individual risk appetite

Investment time horizon

Portfolio diversification

rather than making decisions based purely on recent returns.

Equity Mutual Funds Show Selective Strength

Equity mutual funds were not entirely left behind in 2025. Sectoral funds, especially those focused on banking and financial services (BFSI), delivered strong returns.

Manish Talwar, Founder of Goalstox, highlighted that schemes like Quant BFSI, DSP BFSI, and SBI BFSI generated over 20% annual returns, supported by the resilience of large banks and financial stocks.

He added that large-cap and flexi-cap equity mutual funds outperformed mid- and small-cap peers, as investors preferred stability amid market volatility. Hybrid and balanced funds also offered better risk-adjusted returns.

Why Commodity-Based Mutual Funds Matter Now

Vishranth Suresh, CEO and Co-founder of AssetPlus, said 2025 reinforced the importance of disciplined investing across cycles. While gold and silver delivered exceptional one-year gains, he emphasized that timing and allocation remain critical due to commodity volatility.

“Commodities offer opportunity but demand caution,” Suresh said.

Overall, 2025 highlighted the growing relevance of commodity-based mutual funds, ETFs, and FoFs as strategic portfolio components. Their strong performance, especially in gold and silver, underscored the value of diversification during uncertain market conditions—reminding investors that balance, not just returns, is key to long-term wealth creation.