ETFs
Gold ETFs see first outing after March 2023 at ₹396 cr on profit booking
New Delhi, Gold Exchange Traded Fund witnessed a net outflow of ₹396 crore last month, making it the first withdrawal after March 2023, due to profit recognition.
Gold ETFs see first outing after March 2023 at ₹396 cr on profit booking
Despite the decline, gold funds’ assets under management rose 5 per cent to ₹32,789 crore at the end of April, compared to ₹31,224 crore in the previous month, according to data from the Association of Mutual Funds in India.
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As per the data, gold ETFs recorded a net withdrawal of ₹396 crore in April, compared to an inflow of ₹373 crore in the previous month.
The last time this asset class saw a net outflow was in March 2023, withdrawing ₹266 crore.
“In INR terms, gold has performed quite well over the last year, but it dwarfs stock performance. Against this backdrop, flows into the gold ETF category have been somewhat uneven compared to the equity asset class. That said, investors could “We chose to take profits in this segment, which resulted in net outflows from the asset class despite rising prices,” said Melvyn Santarita, analyst at Morningstar Investment Research India.
Recently, gold prices in US dollars as well as INR have touched new highs. With geopolitical tensions persisting and US inflation still above the desired figure, gold’s appeal as a safe haven and hedge against inflation is likely to continue, he added.
In 2023, gold ETFs saw an inflow of ₹2,920 crore, which was much higher than the inflow of ₹459 crore seen in 2022. The appeal of gold as a safe haven and hedge against inflation improved considerably during the year.
Investors have turned to this traditional safe haven due to rising inflation, subsequent interest rate hikes and geopolitical events, looking for a safe investment option.
Gold, with its exceptional performance over the past few years, has attracted considerable investor interest and the steady increase in the number of folios is testimony to its appeal.
The number of folio in gold ETFs increased by over 1 lakh to 51.84 lakh during the month under review from 50.61 lakh in March 2024. This indicates a growing inclination of investors towards funds linked to gold.
“Investing in gold ETFs offers unparalleled benefits including liquidity, profitability and security,” said Vishal Jain, CEO, Zerodha Fund House.
The preference for gold in times of adversity is also notable in light of the influx of investments in gold ETFs in 2020, when the world was gripped by the COVID-19 pandemic.
An analysis for the period 2019 to 2023 shows that the annual growth of gold ETF assets under management is increasing. AUM increased significantly from ₹5,528 crore in December 2019 to ₹13,819 crore in December 2020 during the pandemic period.
As of December 2023, assets under management were valued at ₹25,959 crore, a substantial increase of 27% from December 2022, 88% from December 2020 and 41% from 2021.
Gold ETFs, which aim to track the price of domestic physical gold, are passive investment instruments based on gold prices that invest in gold bullion.
In short, Gold ETFs are units representing physical gold which can be in paper or dematerialized form.
One gold ETF unit is equivalent to 1 gram of gold and is backed by very high purity physical gold. They combine the flexibility of investing in stocks and the simplicity of investing in gold.
This article was generated from an automated news agency feed without modification to the text.