Equity volatility, liquid funds drive 2x growth in ETF volumes in FY25

ETFs tracking NSE indices recorded Rs 3.8 trillion in trades in FY25, more than double the FY24 figure, as equity swings, regulatory shifts and liquidity needs boost activity

The ₹8 trillion exchange-traded fund (ETF) space in India is making rapid gains on the volume front, as regulatory changes and equity market volatility led to a sharp spike in transactions on exchanges in 2024–25 (FY25).

 

ETFs tracking National Stock Exchange (NSE) indices saw transactions worth ₹3.8 trillion on the exchange in FY25 — a little over double the ₹1.8 trillion in trading volume recorded in 2023–24, according to an NSE report.

 

The surge in volumes followed a 43 per cent jump in investment accounts and nearly 50 ETF launches during FY25. This pushed the number of investment accounts, or folios, to 27 million at the industry level. The number of schemes stood at 252 at the end of March 2025.

   

According to experts, while adoption and volumes have been rising steadily for several years, a 2022 regulatory change gave volumes an added push.

 

“Apart from the long-term structural growth drivers, the regulatory change in 2022 — making the exchange route mandatory for transactions below ₹25 crore — is a key factor behind the surge in volumes,” said Anil Ghelani, head of passive investments and products, DSP Mutual Fund.

 

Siddharth Srivastava, head of ETF products and fund manager at Mirae Asset Investment Managers (India), said equity market volatility in the second half of FY25 also played a role. 

 

“One key reason is the rise in the minimum threshold for direct transactions through asset management companies. This led institutional investors to use the exchange route for transactions under ₹25 crore. Secondly, the number of dematerialised accounts has gone up sharply. Investors — as seen in trends over the past six months — are increasingly using ETFs on days when markets correct,” he said.

 

The rally in gold prices and the emergence of ETFs as a preferred mode of gold investment also contributed, experts said.

 

Even as equity and gold have dominated investor interest, debt ETFs — particularly liquid ETFs — made up the bulk of ETF volumes.

 

Industry estimates suggest that over 40 per cent of ETF trades by value occur in liquid ETFs, which are used by investors to park investible surplus.

 

Vishal Jain, chief executive officer, Zerodha Fund House, said growing ETF adoption is also the result of awareness campaigns. “Apart from regulatory efforts, overall industry awareness has increased, driven by initiatives from various market participants and ecosystem players,” he said.