Tax change, gold rally power FoF AUM past Rs 1 trillion in April

Fund of funds cross ₹1 trillion AUM in April 2025 for the first time, driven by tax reforms, gold's stellar returns, and launch of several new mutual fund offerings

The assets under management (AUM) of domestic fund of funds (FoFs) crossed the ₹1 trillion mark for the first time in April, as the category witnessed renewed interest following the taxation changes announced in Budget 2024.

 

The broader category, which includes offerings across equity, debt and commodities, registered net inflows of over ₹11,300 crore during the 12-month period ending April 2025. This is in stark contrast to the net outflow of ₹2,446 crore recorded in the previous one-year period. 

 

Fund of funds invest the corpus in one or multiple mutual fund (MF) schemes. Currently, there are 96 domestic FoFs, with a majority of them operating as feeder funds for exchange-traded funds (ETFs). These FoFs invest in their respective ETFs. 

 

According to experts, the surge in AUM was aided by a rally in gold prices and the launch of over a dozen new offerings in the space. Gold has been one of the best-performing asset classes in the past year. As of 16 May, gold ETFs had delivered over 25 per cent return over the one-year period.

 

Gold and silver FoFs account for nearly a quarter of the total FoF AUM, amounting to ₹24,085 crore. Of this, gold FoFs alone make up ₹21,416 crore.

 

Asset allocation funds form another major segment of the FoF market. The largest scheme in this space — ICICI Prudential Asset Allocator — manages ₹25,277 crore.

 

In addition, the FoF space has witnessed the emergence of a new category that invests in debt and arbitrage funds. These offerings are viewed as tax-efficient alternatives to conventional debt funds.