Gold ETFs log Rs 141 cr outflow in Nov on profit-booking

By: |
December 9, 2020 4:52 PM

The category has seen inflows since April 2020, although the pace of investment has been trending downwards since July.

Gold price came off its all-time high in the recent times, after witnessing almost an uninterrupted rally this year.

After seven straight months of net inflows, gold exchange traded funds witnessed a pullout of Rs 141 crore in November primarily on the back of profit-booking by investors.

In comparison, the category saw a net inflow of nearly Rs 8 crore in November 2019, data with the Association of Mutual Funds in India (Amfi) showed.

The category has seen inflows since April 2020, although the pace of investment has been trending downwards since July.

Month-wise, investors put in a net Rs 202 crore in January, Rs 1,483 crore in February, but withdrew Rs 195 crore in March on profit-booking.

Inflows resumed in April at Rs 731 crore, followed by Rs 815 crore in May, Rs 494 crore in June, Rs 921 crore in July, Rs 908 crore in August, Rs 597 crore in September, Rs 384 crore in October, and finally an outflow of Rs 141 crore last month.

Gold price came off its all-time high in the recent times, after witnessing almost an uninterrupted rally this year, said Himanshu Srivastava, associate director manager research at Morningstar India.

“Also, with positive development around COVID-19 vaccine, economies moving towards normalcy and equity markets doing well, there is uncertainty over the direction of gold prices going ahead,” he said.

Given this scenario, and with the prices still at elevated levels, investors would have found this as an opportune time to book profit, he added.

Gold-backed ETFs are passive investment instruments that are based on price movements and investments in physical gold.

The latest outflow has pulled down the assets under management (AUM) of gold ETFs to Rs 13,240 crore at the end of November from Rs 13,969 crore at October-end.

Gold ETFs have been among the better-performing asset classes in 2020 and received a net inflow of Rs 6,200 crore during January-November period of the year.

Srivastava said gold functions as a strategic asset in an investor’s portfolio, given its ability to act as an effective diversifier, and alleviate losses during tough market conditions and economic downturns. This is where it draws its safe-haven appeal, which has been on full display since 2019.

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