Gold exchange traded funds (ETFs) have lost favour among investors as mutual fund managers pulled out close to Rs 500 crore from these products in the first two months of the fiscal, mainly on account poor return.
This is in continuation with an outflow from such funds in the past two financial years.
Gold ETFs saw an outflow of around Rs 1,475 crore from these products in 2014-15 and a withdrawal of Rs 2,293 crore by mutual fund (MF) managers in 2013-14.
Market experts attributed the outflows in the ongoing fiscal, 2015-16, to poor returns offered by gold schemes, continuous weak pricing, negative outlook for the yellow metal amid strong equity markets.
According to the data released by Association of Mutual Funds in India (AMFI), fund managers have withdrawn a net amount of Rs 487 crore from gold ETFs during the first two months (April-May) of the current year.
The outflow led to assets under management (AUM) of gold funds plunging by 23 per cent during the period.
“Demand for gold ETFs has been steadily falling for the past two years. Gold ETFs have seen outflow as gold prices are correcting and equities have given good returns to investors,” Quantum AMC Fund Manager (Commodities) Chirag Mehta said.
The mutual fund sector, which launched Gold in 2006-07, has has 14 gold-based schemes.
The outflow pulled the assets base of Gold ETFs to Rs 6,688 crore in May from Rs Rs 8,676 crore at the end of the last fiscal.