Gold ETFs catch investors' eye in Sep, attract inflows for second consecutive month

Gold exchange-traded funds garnered Rs 44 crore in September, making it the second straight month of inflows, as trade conflicts, signs of a global slowdown and decline in equities made investors bet big on the safe-heaven asset.

This comes on the back of a net infusion of Rs 145 crore in gold exchange-traded funds (ETFs) in August. It was the first inflow since November last year, when Rs 10 crore was infused in such instruments.

Prior to this, gold ETFs had seen a net inflow of Rs 20 crore in October 2016 and before that, an inflow of Rs 5 crore was witnessed in such funds in May 2013.

According to the latest data available with the Association of Mutual Funds in India (AMFI), Rs 44 crore was pumped in gold-linked ETFs last month as compared to an outflow of Rs 34 crore in September 2018.

"Sudden rally in gold prices mainly due to uneasy trade negotiation between the US and China, and lower than expected global GDP growth are the key reasons for the inflows in gold ETFs in recent times," said Omkeshwar Singh, head of mutual fund distribution business at Samco.

Himanshu Srivastava, senior analyst manager research, Morningstar Investment Adviser India said, "Like in the month of August, gold ETFs continued to witness net inflow in the month of September as well, although the quantum of net inflow was lower than the previous month. The slowdown in flows could be attributed to profit booking given the surge in gold prices in the recent times."