INSUBCONTINENT EXCLUSIVE:
Gold ETFs logged Rs 248-cr outflow in February as investors prefer equity fundsNew Delhi: Gold exchange-traded funds (ETFs) witnessed a net
outflow of Rs 248 crore in February, making it the second consecutive month of withdrawals as investors preferred equities over other
segments on record SIP flows.Net outflows from the gold ETFs were at Rs 452 crore in January
Before that, the asset class had seen a net investment of Rs 313 crore, according to the Association of Mutual Funds in India (Amfi).Despite
the outflows, the category witnessed an increase in net assets under management (AUM) of gold ETFs to Rs 18,727 crore at the end of February
from Rs 17,839 crore in January-end
Also, the segment saw a surge in the number of folios by 3.09 lakh to 37.74 lakh during the period under review.This move could be directed
towards gold assets being considered a tool for diversification of the portfolio by the investors and a hedge against market
diverting their investments from gold instruments to equity as a portfolio rebalancing strategy due to the attractive returns garnered by
Also, investors view this market correction as an opportunity to enter the markets."Secondly, given the rise in prices of gold, traders may
have booked the profits and exited their trades for managing their margin money for trade in other asset classes," she added.Kavitha
Krishnan, Senior Analyst - Manager Research, Morningstar India, said that investors have almost always favoured gold as an asset that can be
used to mitigate risks and diversify their investments.Over time, the rising prices of gold and the increasing appeal around the commodity
have led to many investors choosing to invest in gold ETFs
However, the category has witnessed outflows for the second month."With equities garnering the most flows and SIP (systematic investment
plan) touching record highs, investors prefer this segment over the others, including gold ETFs
Moreover, investors also seem to be booking profits by redeeming their investments, given the uptick in gold prices," she added.In 2021,
gold ETFs attracted Rs 4,814 crore primarily due to the firming of inflation and elevated market valuations
The inflow was lower compared to Rs 6,657 crore seen in 2020.Gold ETF, which aims to track the domestic physical gold price, are passive
investment instruments based on gold prices and invest in gold bullion.In short, gold ETFs are units representing physical gold in paper or
One gold ETF unit is equal to 1 gram of gold and is backed by physical gold of very high purity
They combine the flexibility of stock investment and the simplicity of gold investments.
