Despite the decline in inflows, gold ETF assets under management (AUM) rose more than 6% to Rs 16,625 crore at the end of May, from Rs 15,629 crore at the end of April, according to data from the ‘Association of Mutual Funds in India (Amfi) shown.
According to the data, a net sum of Rs 288 crore was pumped into gold-linked exchange traded funds (ETFs) last month, below Rs 680 crore in April.
Investors had invested Rs 662 crore in such funds in March, Rs 491 crore in February and Rs 625 crore in January.
“The lower amount of net inflows in May could be attributed to stock markets that are doing well and to investors diverting a relatively larger portion of their investments there,” said Himanshu Srivastava, associate director of research at Morningstar India.
Additionally, the buyback amount increased in May compared to April, meaning few investors would have chosen to make a profit given the recent surge in gold prices, he added.
With its appeal as a safe haven and being one of the best performing asset classes over the past year and a half, the Gold ETF category has gained popularity among Indian investors.
From January 2020 to May 2021, the category received a net inflow of Rs 9,377 crore.
According to Srivastava, gold functions as a strategic asset in an investor’s portfolio, given its ability to act as an effective diversification tool and to mitigate losses during difficult market conditions and economic downturns.
“During the difficult investment environment over the past few years, gold has become one of the best performing asset classes, proving its effectiveness in the investor portfolio,” he said. declared.
As might be expected, this has attracted investor interest and continues to do so, as evidenced by the consistent net entries in the gold ETF category, he added.
Gold ETFs are exchange traded funds that invest in gold. They are listed on the stock exchange and invest directly in gold.