Mutual funds: Gold funds continue to see big inflows

Gold saving funds and gold exchange traded funds (ETFs) witnessed net inflows of ₹864 crore in April amid uncertain economic environment in the wake of the second wave of COVID-19.

Gold saving funds and gold ETFs have seen net inflow to the tune of ₹184 crore and ₹680 crore, respectively in the month of April, according to data provided by Morningstar India.

This comes following net inflow of over Rs 3,200 crore in gold funds in the entire 2020-21, while the same for gold ETFs was more than ₹6,900 crore as per the data.

"The sharp and intense surge in coronavirus cases this year has fanned hopes that, as an asset class, gold may continue to perform well in the current environment. This has kept investors interest intact in the asset class," Himanshu Srivastava, Associate Director, Morningstar India said as quoted by news agency PTI.

Moreover, these instruments have delivered 13-14% annualised CAGR return in the last three years, more than 8% in past five years.

Morningstar India's Srivastava said that the investment environment over the last few years have been extremely conducive for gold as an asset class. 

"Threat of an economic downturn and tough market environment provided gold enough reason to unlock its true potential. It did so and delivered superior performance since 2019, consequently helping gold ETFs and gold funds to clock impressive returns over three- and five-year period," he added.

Gold saving fund is a mutual fund that invest in gold ETFs and such fund do not directly invest in physical but indirectly through gold ETFs. An investor can invest in gold saving fund through systematic investment plan (SIP).

On the other hand, gold ETFs are basically exchange-traded funds that invest in gold. They are traded on the stock market and make direct investments in gold. 

(With inputs from PTI)