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Home / Mutual Funds / News /  Gold ETFs log 2,426 crore inflow in Sep quarter, 14 times higher y-o-y

Gold exchange-traded funds (ETFs) saw staggering net inflows of over 2,426 crore in the three months ended September 30, as investors continued to hedge their exposure to riskier assets due to higher economic uncertainty resulting from COVID-19 and US elections. The inflows during the Jul-Sep quarter of the current year were 14 time higher than the inflows during the same quarter last year. Investors had infused 172 crore in this asset class in quarter ended September 2019, shows Association of Mutual Funds in India (Amfi) data.

Gold ETF category has received a net inflow of 5,957 crore so far this year.

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.

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

Inflows resumed in April at 731 crore, followed by 815 crore in May, 494 crore in June, 921 crore in July, 908 crore in August and 597 crore in September.

Total assets under management (AUM) for gold ETFs has surged from 5613 crore at the end of September 2019 to 13,590 crore at the end of September 2020.

A gold ETF or exchange-traded funds is listed on the exchanges and invest in physical gold. Each unit of a Gold ETF represents 1/2 gram of 24 karat physical gold. Gold ETFs provide ample liquidity as these can be sold on exchanges anytime. Gold ETFs are traded on the exchange at the prevailing market price of physical gold, thus investors can buy or sell holdings at close to the market price, without paying a premium on purchase or selling at a discount.

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