Business Standard

Gold ETF inflow dips since Sept

Higher prices, volatile market and investment alternatives make many stay away

Related News

After equities, it seems are now wary of gold exchange traded funds (ETFs), too, as the yellow metal’s prices continue to remain higher. Net inflows are fast shrinking and even investors have started moving out of this asset class offered by mutual fund houses.

The first half of the current financial year witnessed robust inflows of Rs 2,658 crore, surpassing what the industry could garner in the previous financial year. The investments in gold ETFs touched its peak when investors pumped in close to Rs 1,000 crore in September. However, what followed in the second half of the year suggests lessening investors’ interest in gold.

Nitin Rakesh, chief executive of Motilal Oswal Mutual Fund, notes gold is price-sensitive. “Higher prices could be one factor why investors are staying away. After Diwali, it’s an off-season; hence, a reduction in sales,” he says. “I believe that at current prices, investors have shelved their plans. Even so, if markets correct, say to Rs 23,000 or Rs 25,000, then people would put in money.”

LOSING LUSTRE
Inflows dwindle in gold ETFs so far in FY12
Month Net
inflows
Total 
sales
AUM
Apr  121 239 4,800
May  569 621 5,463
Jun 252 312 5,568
Jul 234 336 6,119
Aug 494 857 7,578
Sep 988 1,234 8,173
Oct 455 536 9,090
Nov -22 352 9,568
Dec 157 233 9,153
Jan 82 136 9,614
Feb 85 117 9,795
All figures in Rs crore
Source : Association of Mutual Funds in India (Amfi)

February continued to be a dull month for gold ETFs, as fresh money that was pumped in stood at a mere Rs 85 crore. Prior to this, in January, too, only Rs 82 crore could make its way to gold ETFs. Interestingly, over 4,000 folios in this category got closed last month — for the first time over the last one year.

“Gold is an asset class which is well understood by Indian investors,” explains the chief marketing officer of a large-sized fund house which has a gold product. “One cannot rule out that higher prices are somewhat having its impact on gold ETFs sales. But I do not think it is alarming.”

During the current financial year, spot prices of standard gold shot up to as high as Rs 29,140 during November, marking a rise of 40 per cent. This high return came at a time when equity had seen an erosion of close to one-fourth of their values. Since then, gold prices corrected 4.5 per cent, but continued to remain volatile.

Dhruva Chatterji, senior research analyst at Morningstar India, says volatile markets and constant higher prices of gold are proving deterrent for retail investors. “If they are staying away from gold and equities, it is because they have availability to better return avenues, including fixed deposits and infrastructure bonds,” he adds. “Investors are smart and tend to migrate to safer havens for better returns.”

Gold funds have been the best performing schemes for over a year. For the year ending 20 March, funds in the category have given a return of 31.53 per cent. This means an investment worth Rs 100 has a current value of Rs 131.53.

The current financial year has seen assets under management (AUM) more than doubling in gold funds. As on February 29, stood at Rs 9,795 crore against Rs 4,400 crore as on March 31, 2011.

During the year, two new gold funds were launched. Recently, too brought its gold ETF.

Read more on:   
|
|
|
|
|
|

Gold ETF inflow dips since Sept

Higher prices, volatile market and investment alternatives make many stay away

After equities, it seems retail investors are now wary of gold exchange traded funds (ETFs), too, as the yellow metal’s prices continue to remain higher. Net inflows are fast shrinking and even investors have started moving out of this asset class offered by mutual fund houses.

After equities, it seems retail investors are now wary of gold exchange traded funds (ETFs), too, as the yellow metal’s prices continue to remain higher. Net inflows are fast shrinking and even investors have started moving out of this asset class offered by mutual fund houses.

The first half of the current financial year witnessed robust inflows of Rs 2,658 crore, surpassing what the industry could garner in the previous financial year. The investments in gold ETFs touched its peak when investors pumped in close to Rs 1,000 crore in September. However, what followed in the second half of the year suggests lessening investors’ interest in gold.

Nitin Rakesh, chief executive of Motilal Oswal Mutual Fund, notes gold is price-sensitive. “Higher prices could be one factor why investors are staying away. After Diwali, it’s an off-season; hence, a reduction in sales,” he says. “I believe that at current prices, investors have shelved their plans. Even so, if markets correct, say to Rs 23,000 or Rs 25,000, then people would put in money.”

LOSING LUSTRE
Inflows dwindle in gold ETFs so far in FY12
Month Net
inflows
Total 
sales
AUM
Apr  121 239 4,800
May  569 621 5,463
Jun 252 312 5,568
Jul 234 336 6,119
Aug 494 857 7,578
Sep 988 1,234 8,173
Oct 455 536 9,090
Nov -22 352 9,568
Dec 157 233 9,153
Jan 82 136 9,614
Feb 85 117 9,795
All figures in Rs crore
Source : Association of Mutual Funds in India (Amfi)

February continued to be a dull month for gold ETFs, as fresh money that was pumped in stood at a mere Rs 85 crore. Prior to this, in January, too, only Rs 82 crore could make its way to gold ETFs. Interestingly, over 4,000 folios in this category got closed last month — for the first time over the last one year.

“Gold is an asset class which is well understood by Indian investors,” explains the chief marketing officer of a large-sized fund house which has a gold product. “One cannot rule out that higher prices are somewhat having its impact on gold ETFs sales. But I do not think it is alarming.”

During the current financial year, spot prices of standard gold shot up to as high as Rs 29,140 during November, marking a rise of 40 per cent. This high return came at a time when equity had seen an erosion of close to one-fourth of their values. Since then, gold prices corrected 4.5 per cent, but continued to remain volatile.

Dhruva Chatterji, senior research analyst at Morningstar India, says volatile markets and constant higher prices of gold are proving deterrent for retail investors. “If they are staying away from gold and equities, it is because they have availability to better return avenues, including fixed deposits and infrastructure bonds,” he adds. “Investors are smart and tend to migrate to safer havens for better returns.”

Gold funds have been the best performing schemes for over a year. For the year ending 20 March, funds in the category have given a return of 31.53 per cent. This means an investment worth Rs 100 has a current value of Rs 131.53.

The current financial year has seen assets under management (AUM) more than doubling in gold funds. As on February 29, AUM stood at Rs 9,795 crore against Rs 4,400 crore as on March 31, 2011.

During the year, two new gold funds were launched. Recently, Canara Robeco Mutual Fund too brought its gold ETF.

image

Read More

Jewellers strike enters 14th day

The strike by bullion traders and jewellers to protest the proposed increase in import duty on gold and imposition of excise duty on unbranded ...

Recommended for you

Advertisements

Quick Links

Market News

Delivery-based volumes hit one-year high in March

Earlier, in March 2014, more than half, or 51%, of the total traded shares got converted into delivery before the general elections

Gold shipments into Gujarat register highest rise in last four years: GSECL

The official added that rise in import of gold is a sign that the economy is recovering slowly

FY16 begins on a firm note; Sensex ends 300 points higher

The 30-share Sensex gained 303 points to end at 28,260 and the 50-share Nifty soared 95 points to close at 8,586

Sensex gains over 300 points led by financials

Provisionally, the 30-share Sensex gained 134 points to end at 28,091 and the 50-share Nifty soared 39 points to close at 8,530

Bank Nifty rebounds over 450 points from intra-day low

At 1506 hours, Bank Nifty was up 386 points at 18,592, bouncing back 461 points from intra-day low of 18,131 on the NSE.

 

Back to Top