Gold ETFs see inflow of ₹200 cr in Jan; highest since December 2012

Gold exchange-traded funds witnessed a net inflow of ₹200 crore in January, making it the highest infusion in seven years, as geopolitical tensions in different parts of the globe and slowdown in global economy led investors to opt for the safe-haven.

This also marks the third consecutive monthly inflow in gold exchange-traded funds (ETFs).

According to latest data available with Association of Mutual Funds in India (Amfi), a net sum of ₹202 crore was pumped in gold-linked ETFs in January as compared to ₹27 crore in the preceding month.

Prior to that, the safe-haven asset saw an infusion of ₹7.68 crore in November. However, it had seen a pull out ₹31.45 crore in October. Such funds saw an infusion of ₹44 crore in September and ₹145 crore in August.

The latest monthly inflow was the highest one since December 2012, when gold ETFs saw a net infusion of ₹474 crore.

"Gold ETFs witnessed a strong net inflow in the month of January. This was significantly higher than ₹27 crore, which the segment received in the month of December. Geopolitical tensions in different parts of the globe and slowdown in global economy led investors to opt for safe-haven like gold over the last one year," said Himanshu Srivastava, Senior Research Analyst - Manager Research, Morningstar Investment Adviser India.

"The appeal of yellow metal enhanced recently on the back of rising concerns over the severity of the coronavirus outbreak. As the investors weigh the fallout of the epidemic, they have increased their allocation to gold for its safe-haven appeal," he added.

The inflows meant asset under management (AUM) of gold funds surged 7.6 per cent to ₹6,207 crore at the end of January from ₹5,768 crore at the end of December.

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

Overall, mutual fund houses witnessed an inflow of ₹1.2 lakh crore last month as compared to an outflow of ₹61,810 crore in December 2019. This inflow led to AUM of the 44-player industry rising to ₹27.85 lakh crore by January-end from ₹26.54 lakh crore at the end of December.