Equity mutual funds witnessed a net inflow of Rs 18,529.43 crore in May compared to the net inflow of Rs 15890.38 crore during the month of April 2022. Gold ETFs, however, witnessed a decrease in the net inflow in May 2022 as it stood at Rs 203 crore compared to Rs 1100 crore in April, according to AMFI’s monthly data for May 2022.
According to industry experts, gold ETFs have witnessed a surge in assets owing to their positive performance over the past few years. This is evidenced by the consistent increase in the folio numbers.
Folio numbers in Gold ETFs surged from 16 lakh in May 2021 to 45 lakh in May 2022, an increase by almost 281%. Between April 2022 and May 2022, the number of folios went up by 2.23 lakh. After having witnessed outflows during the first two months of the year 2022, Gold ETFs started witnessing inflows in March 2022, with the magnitude of net flows amounting to Rs 203.39 crore during the month of May 2022.
“Gold is considered to be a good investment avenue, and a hedge against market downturns. Gold emerged as one of the better performing asset classes during the challenging investment environment posed by Covid and economic downturn, thus proving its effectiveness in investors’ portfolio,” said Kavita Krishnan, Senior Analyst – Manager Research, Morningstar India, commenting on AMFI’s monthly data for May 2022.
While gold is considered as a safe haven and finds a lot of appeal amongst investors, it lost some of its sheen as gold prices came down post August 2020. Prices picked up again in January and February 2022, which likely gave investors an opportunity to exit their investments in gold.
“Although inflows in the recent past were likely impacted as investor preferences shifted towards other avenues like Silver ETFs and equity-oriented funds, we’ve witnessed a positive trajectory over the past three months, evidenced by the inflows and an increase in the number of folios,” she added.