In June, Gold ETFs received a net inflow of Rs 359.66 crore, which was higher than Rs 287.86 crore in May.
Gold ETFs continue to receive good net inflows from investors. Investors are steadily acknowledging the need for adding gold as a diversifier in their portfolios. This is evident from the folio number data in Gold ETF which surged by almost 10% in June to 18.32 lakh from 16.68 lakh in May.
In June, the category received a net inflow of Rs 359.66 crore, which was higher than Rs 287.86 crore in May. “The redemption amount was higher in June compared to May signifying that a few investors would have chosen to book profit given gold prices continue to tread at elevated levels. However, at the same time, the amount mobilised too shot up sharply in June as against May. This along with the increase in folio numbers indicates that gold as an asset class has been attracting a greater number of investors,” said Himanshu Srivastava, Associate Director – Manager Research, Morningstar India, commenting on Gold ETFs based on AMFI monthly data for June 2021.
From January 2020 till June 2021, the category has received a net inflow of Rs 9,737.14 crore. 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. During the challenging investment environment over the last few years, gold emerged as one of the better performing asset classes, thus proving its effectiveness in investors’ portfolio. Expectedly, this has attracted investors interest, and continues to do so, which is evident from the consistent net inflows into the Gold ETF category.
Priti Rathi Gupta, Founder, LXME (India’s first financial platform for women), said, “Gold ETFs saw an increased inflow from Rs 287 crore in May to Rs 359 crore in June. Even though debt funds haven’t given great yields in the past term and gold has also surged, yet it is observed that investors are turning in their equity investments to invest in debt funds and gold.”
As the market is too high, investors sort to portfolio rebalancing to safeguard their capital against market volatility. “In an all-time high market and the prevailing overall uncertainty, investors are wary and want to safeguard the immediate future. Also, investible surplus is seeing a crunch due to the second wave of Covid and the slowdown of economy.”