Gold ETFs witness third straight month of inflows; AUM rises 10% YTD

Gold exchange-traded funds (ETFs) logged a third straight month of net inflows in May. But the quantum of inflows, at Rs 203 crore, was much lower than the Rs 1,100 crore seen in April. Domestic gold prices fell close to 2 per cent in May amid forecasts of a global economic growth slowdown. The S&P BSE Sensex dropped 2.6 per cent last month. In the past three months, investors have poured in over Rs 1,500 crore in gold ETFs offered by domestic mutual funds.

“While gold is considered a safe haven and finds a lot of appeal among investors, it lost some of its sheen as gold prices came down after August 2020. Prices picked up again in January and February 2022 which likely gave investors an opportunity to exit their investments in gold. Although inflows in the recent past were likely impacted as investor preferences shifted towards other avenues like silver ETFs and equity-oriented funds, we have witnessed a positive trajectory in the past three months, evidenced by the inflows and an increase in the number of folios,” said Kavita Krishnan, senior analyst (manager research), Morningstar India.

During the first five months of 2022, domestic gold prices rose 6.3 per cent, outperforming the Sensex, which declined 4.6 per cent during the same period.

About 223,000 new folios were added in gold ETFs in May, taking the total tally to 4.5 million. The assets under management (AUM) for gold ETFs stood at Rs 20,262 crore during the period, up 10 per cent over a year earlier. Globally, the AUM for gold ETFs stands at about $226 billion.