The Hindu Business Line : Gold ETFs gain favour; collections rise 14% in August

Mumbai, Sept. 18 The high uncertainty in the financial markets coupled with the fall in gold prices last month worked in favour of the five listed gold ETFs in the country, whose collections rose 14 per cent in August.

Their collections rose to 5.75 tonnes in end-August, from 5.01 tonnes in end-July. This is the most they have gone up in the last nine months. In July, the holdings saw an increase of just about seven per cent, and in June, an increase of 4.3 per cent.

Gold prices fell around 4.5 per cent in August. “More people were putting their money in gold as the financial markets seemed more and more uncertain and gold prices too fell to attractive lows,” said Mr Rajan Mehta, Executive Director, Benchmark AMC.

“Gold is a hedge against uncertainty,” Mr Dhirendra Kumar, Chief Executive Officer, Value Research, said.

Although a 14 per cent increase on a small base may not seem that significant, collections have gone up a hundred per cent in just a year’s time, said Mr Mehta.

The listed ETFs have also given better returns than the Sensex or the Nifty. Their average returns over the month to date (from August 17) were 1.98 per cent, while the Sensex and the Nifty gave negative returns of close to ten per cent for the same period.

“Gold is like insurance for one’s portfolio,” said Mr Devendra Nevgi, Chief Operating Officer and Chief Executive Officer of Quantum AMC.

The Assets Under Management (AUM) for the five ETFs have risen to Rs 650 crore in August from Rs 547 crore in July. However on Thursday, gold rose by Rs 1,270 to Rs 13,020 per ten grams, due to a marginal increase in the price of crude and reports that fund houses are buying the yellow metal.

The five listed ETFs were up between seven and eight per cent on Thursday.

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