Gold ETFs

After witnessing the withdrawal of funds in the last three months, Gold exchange-traded funds (ETFs) attracted a net flow of Rs 165 crore in February, mainly due to a slight correction in local yellow metal prices. This was in comparison to a net outflow of Rs 199 crore registered in January, Rs 273 crore in December and Rs 195 crore in November. Prior to that, Gold ETFs attracted Rs 147 crore in October, data from the Association of Mutual Funds in India (Amfi) showed. "Despite witnessing outflows across most markets, Gold ETFs in India witnessed inflows in February. This was largely backed by a small correction in local Gold prices. The demand for ETFs largely arises when there is a correction in prices," Kavitha Krishnan, Senior Analyst Manager Research, Morningstar India, said. The demand for physical Gold in India is largely driven by festival and wedding season, she added. Also, the segment saw an increase in the number of folios by around 20,000 to 46.94 lakh during the pe

Inflow in gold exchange traded funds (ETFs) plunged by 90 per cent to Rs 459 crore in 2022 due to rising prices of yellow metal, increasing interest rate structure coupled with inflationary pressures. This was way lower than an inflow of Rs 4,814 crore seen in the segment during 2021 and Rs 6,657 crore in 2020, data with Association of Mutual Funds in India (Amfi) showed. However, the asset base of gold ETFs and investors' account or folio numbers increased in 2022 from the preceding year. "A rising price (of gold) probably puts some pressure on investors, with a lot of people holding back their investments while they wait for a correction. A rising interest rate structure coupled with inflationary pressures that the economy has been witnessing for most part of this year has also posed challenges," Kavitha Krishnan, Senior Analyst Manager Research, Morningstar India, said. On the domestic front, investors are preferring to invest in equities over other asset classes with the segmen

Market experts opined that Russia-Ukraine conflict led to a short-term spike in gold prices before it began falling amid stronger dollar and spike in crude oil prices

After attracting funds in October, gold exchange-traded funds (ETFs) witnessed a net outflow of Rs 195 crore last month primarily due to profit booking amidst a rally in the markets. In comparison, the segment had attracted a net inflow of Rs 147 crore in October and Rs 330 crore in September. Prior to that, gold ETFs saw a net withdrawal of Rs 38 crore in August, data with Association of Mutual Funds in India (Amfi) showed. "The latest outflow could be attributed to profit booking amidst the rally in the markets and gold demand in the households for the prevailing wedding season," Priti Rathi Gupta, Founder of LXME, said. While the fund inflow in October was mainly on account of festive season demand as investors might have chosen to buy physical gold. Overall, the gold ETF category has received a net inflow of Rs 1,121 crore so far this year, the data showed. Despite the outflow, the assets under management (AUM) of the instrument surged to Rs 20,833 crore at the end of November

To encourage retail investors to invest in yellow metal through mutual fund route, industry body Amfi has asked the government for preferential tax treatment for Gold ETFs and Fund of Funds ahead of the Union Budget. In its budget proposals for 2023-24 to the finance ministry, Amfi has proposed that Gold ETFs and Fund of Funds (FoF), which invest 90 per cent or more of their corpus in units of Gold ETFs, should be subjected to long-term capital gains tax of 10 per cent instead of 20 per cent with indexation benefit. Alternatively, it has suggested that holding period to avail long-term capital gains taxation in respect of Gold ETFs (exchange traded funds) should be reduced from existing three years to one year. "A preferential tax treatment to financial gold offerings like Gold ETFs and Fund of Funds ...will promote the category as a gold investment avenue over other fiscally inefficient avenues like physical gold and gold jewellery. This move will be in line with the government's

One-year returns, however, better than most equity, debt funds

Between October 2021 and September 2022, gold prices rose over 9.5 per cent even as ETF inflows shrunk to a half

Those who desire liquidity should opt for a gold ETF having low expense ratio and high volume

At a time when there are many risks and uncertainties in the global economy, a 20 per cent allocation to gold ETFs in an investment portfolio during Diwali is ideal, said Quantum AMC

Use current correction to build a 10-15% allocation to yellow metal

In August, gold ETFs logged outflows of Rs 38 crore, extending their two-month outflows to nearly Rs 500 crore

The latest bout of outflows come amid a sharp surge in the equity markets

Gold Exchange Traded Funds (ETFs) witnessed a net outflow of Rs 457 crore in July as investors parked their money in other asset classes as part of their portfolio rebalancing strategy.

It may underperform in the near term, but could bounce back if fears of a US recession gain ground

But the quantum of inflows, at Rs 203 crore, was much lower than the Rs 1,100 crore seen in April

The category's net assets under management at the end of March stood at Rs 19,280 crore

In the past one month, silver funds have returned 7.34%, gold funds on an average are up by about 6%. In comparison, Nifty is down 4%

The global recovery and improved investor sentiment resulted in gold ETF flows sobering down in 2021 compared to the pandemic year.

Gold ETFs continue to attract investor attention and have garnered net assets worth Rs 683 crore in November

Amid a global surge in inflation and rising crude oil prices, markets expect central banks to hike interest rates sooner than expected