Gold ETFs inflows back in black

Asset class witnessed net inflows of Rs 5 crore in May

After three months of continuous outflows and declining sales, investors have shown some interest back in gold exchange traded funds (ETFs). Thanks to the sudden decline in prices of gold - the underlying asset of gold ETFs; that the category witnessed marginal positive inflows of Rs 5 crore in May.

As per the latest figures available from mutual fund industry body Association of Mutual Funds in India (Amfi), sales of gold ETFs jumped to Rs 163 crore - a rise of 15% against the immediate previous month. And when compared to the previous three months' average, the sales numbers stood close to 90% higher.

According to market experts, investors remained cautious on gold throughout May. There were anticipations that gold would correct further but the yellow metal stabilised around Rs 26,000 per 10 gram which gave some comfort to investors.

However, fund managers maintain that the kind of run the precious metal saw over the last few years is an aberration and it may not show the same move for next couple of decades.

It was in March this year that gold ETFs saw one of the highest net outflows of Rs 87 crore in recent times. During the month, the sales too had dipped to as low as Rs 38 crore - not seen for several months.

Currently, India's mutual fund industry offers 14 gold ETFs. As on 31 May, 2013 the total assets under management fund (AUM) of gold ETFs stood at Rs 10,580 crore.

The previous financial year, 2012-13, had seen inflows into gold ETFs tapering off. Against a net inflow of Rs 3,646 crore of inflows in FY12, last financial year could see net inflows of only Rs 1,414 crore.

Table showing sales and net inflows in Gold ETFs
Month	Sales	Net Inflows
Jan	137	81
Feb	81	-8
Mar	38	-87
Apr	141	-36
May	163	5
All figures in Rs crore
Source: Amfi