Gold ETFs lose sheen, investors withdraw Rs. 280 cr. in April-Nov.

Gold exchange-traded funds (ETFs) continue to lose steam, with investors pulling out Rs. 280 crore during the April-November period of the current fiscal, preferring to invest in equities despite volatile markets. In comparison, 14 gold-linked ETFs had witnessed a withdrawal of Rs. 511 crore in the first eight months of 2017-18, latest data from industry body Amfi showed.

Reduction in AUM The outflow reduced assets under management (AUMs) of gold funds by 11% to Rs. 4,385 crore at the end of November, from Rs. 4,922 crore a year ago. Gold ETF trading has been tepid during the past five financial years. It saw an outflow of Rs. 835 crore in 2017-18, 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. However, the segment had witnessed an infusion of Rs. 1,414 crore in 2012-13. Industry experts said positive returns given by the equity market have resulted in Indian investors largely staying away from gold ETFs.

In fact, redemptions have been seen in the past five years. They said Indian investors have traditionally preferred to hold gold in physical form, rather than ETFs which are actually a better form of holding from an investor’s perspective. On the other hand, equity and equity-linked savings schemes saw an infusion of over Rs. 82,200 crore in the April-November period of 2018-19 despite volatile equity markets.


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