Gold exchange-traded funds (ETFs) continued to lose sheen as an investment class, with investors pulling out over Rs 420 crore from such instruments in April- October 2017, as per the latest data by mutual fund body Amfi. Moreover, trading in gold ETF has been lukewarm in the last 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 saving scheme (ELSS) saw an infusion of over Rs 96,000 crore during the first seven months (April-October) of the ongoing financial year. This included an investment of close to Rs 17,000 crore in the last month alone.
Stock markets have been on an upswing, touching new highs this year. “Investors have been opting for equity over gold and other asset classes in the past few years as equities have given them good return,” Anshul Saigal, portfolio manager at Kotak Mutual Fund said. Gold ETFs are passive investment instruments that are based on price movements and investments in physical gold. “While demand from India has traditionally buttressed gold prices globally, sound rally in the Indian equity markets has meant that gold as an asset class has not been favoured. A strong Indian equity market may mean a sober outlook for gold,” Vidya Bala, head of MF Research at FundsIndia.com said.
According to the latest data available with the Association of Mutual Funds in India (Amfi), a net sum of Rs 422 crore was pulled out from 14 gold-linked ETFs during April-October period this year. In comparison, a net amount of Rs 519 crore was withdrawn from the instrument in the year-ago period.
The outflow meant assets under management (AUM) of gold funds plunged to Rs 5,017 crore at October-end from Rs 5,480 crore at the end of March. Withdrawal of Rs 66 crore was seen in April this year, Rs 71 crore in May, Rs 81 crore in June, Rs 38 crore in July, Rs 58 crore in August, Rs 74 crore in September and another Rs 34 crore in October.