Gold ETF category has been gaining significant traction from Indian investors
Since August 2019, the category has received a net inflow of ₹4,644 crore
Gold ETFs witnessed an inflow of ₹921 crore in July, 86% higher than the preceeding month. Investors rush to invest in safer instruments like gold due to the pandemic Covid19. According to Amfi, the total assets under management for the gold ETF category stood at ₹12,941 crore as on July 31. The AUM of gold ETFs grew by 19% month-on-month.
"As the surge in coronavirus cases have cast a doubt on the swift recovery hopes, investors continue to hedge their exposure to riskier assets by investing a portion of their assets in gold, as it is seen as a safe haven in times of uncertainty," said Himanshu Srivastava, Associate Director – Manager Research at Morningstar India.
Gold ETFs collected net ₹202 crore in January, ₹1,483 crore in February. Investors withdrew ₹195 crore in March. Inflows Inflows resumed in April at ₹731 crore, followed by ₹815 crore in May.
The category has collected net ₹4,249 crore since the beginning of this year.
Srivastava believes gold will continue to gain investments.
"Considering the threat posed by the coronavirus pandemic to the global economy and the markets, this segment may continue to gain traction from investors," says Himanshu Srivastava.
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 it’s a safe-haven appeal, which has been on full display since 2019.