Gold ETFs record Rs 656 cr outflow in FY16

AUM down 8.5% to Rs 6,096 crore in January

Investors continued to pull out money from gold exchange-traded funds (ETFs) and withdrew Rs 656 crore in the first ten months of the current fiscal, shrinking asset base of such products by more than eight per cent.

It also marked the third consecutive financial year of outflow from gold ETFs. The pace of outflow slowed, however, in 2015-16 compared with the preceding two fiscal years on account of sluggish equity market trends, experts said.

The gold ETFs witnessed a net outflow of Rs 656 crore in the first ten months (April-January) of the ongoing fiscal year, as compared to an outflow of Rs 1,290 crore in the same period of 2014-15 fiscal.

These funds witnessed outflows of Rs 1,475 crore in the entire 2014-15 and a withdrawal of Rs 2,293 crore in 2013-14.

The demand for gold ETFs has been steadily falling in the past few years. These products have seen outflow as gold prices are correcting and equities have given good returns to investors.

Retail investors have been putting in more money into equity and debt mutual funds during April-January period of the current financial year. Equity and equity-linked saving schemes saw an infusion of nearly Rs 73,000 crore and debt funds attracted about Rs 30,000 crore.

Overall, mutual fund schemes have witnessed an inflow of Rs 1.84 lakh crore during the period under review.

Of late, gold ETFs have been losing sheen as gold prices are correcting.

The outflow pulled down the asset base of gold funds to Rs 6,096 crore in January 2016, from Rs 6,665 crore at the end of March 2015, translating into a slump of 8.54 per cent.

The mutual fund sector has 14 gold-based schemes, which have been in the market since 2006-07.