Gold & Silver

Gold ETFs see Rs 679 cr outflow in 10 months

PTI New Delhi | Updated on February 11, 2018 Published on February 11, 2018

ETFs are passive investment instruments that are based on price movements and invest in the metal.

Trading in gold exchange-traded funds (ETFs) has been lukewarm in the previous four fiscals.

Investors have pulled out Rs 110 crore from gold exchange-traded funds in January, taking the total outflow to Rs 679 crore in the first 10 months of the current fiscal, mainly on account of poor returns. The outflow meant assets under management (AUM) of gold funds plunged by over 15 per cent during the period under review to Rs 4,906 crore, from Rs 5,670 crore in the year-ago period, latest update with the Association of Mutual Funds in India (Amfi) showed.

Trading in gold exchange-traded funds (ETFs) has been lukewarm in the previous four fiscals. It had witnessed an outflow of Rs 775 crore in 2016-17, Rs 903 crore in 2015-16, Rs 1,475 crore in 2014-15 and Rs 2,293 crore in 2013-14. On the other hand, equity and equity-linked savings scheme (ELSS) saw an infusion of Rs 1.5 lakh crore during the first 10 months of 2017-18. This included an investment of over Rs 15,000 crore in the last month alone.

“Barring couple of months, India has seen net negative flows in gold ETFs from February 2013. Even in terms of inflows, from triple-digit crore of inflows until 2012, it has now dwindled to low single-digit and almost nil in some months. Domestic gold’s 3-year annualised returns at less than 3 per cent is lower than even savings bank rate today,” said Vidya Bala, head of mutual fund research at Fundsindia.com.

“The sell-off in gold is in line with poor sentiments for gold world-wide. This comes on the back of stronger fundamentals in global economies, especially in the US. Expectation of faster rate hike in the US means that bonds yields will be expected to be more attractive than gold. Thus, the current sentiments do not bode well for gold as an asset class,” she added.

Gold ETFs are passive investment instruments that are based on price movements and invest in the metal. According to Amfi data, a net sum of Rs 110 crore was pulled out from 14 gold-linked ETFs in January, as compared to to Rs 35 crore in the same month in 2016-17.

In December, a net sum of Rs 58 crore was withdrawn from the instrument. With the latest outflow, the total pullout has reached to Rs 679 crore in April-January period of the ongoing fiscal. Gold ETFs have been continuously seeing a withdrawal. The segment last saw an inflow of Rs 20 crore in October 2016.Prior to that, an inflow of Rs 5 crore was witnessed in such instruments in May 2013.

Published on February 11, 2018
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