Gold ETFs continue to acquire superior net inflows from investors. Investors are steadily acknowledging the need to have for adding gold as a diversifier in their portfolios. This is evident from the folio quantity information in Gold ETF which surged by practically 10% in June to 18.32 lakh from 16.68 lakh in May.
In June, the category received a net inflow of Rs 359.66 crore, which was larger than Rs 287.86 crore in May. “The redemption amount was higher in June compared to May signifying that a few investors would have chosen to book profit given gold prices continue to tread at elevated levels. However, at the same time, the amount mobilised too shot up sharply in June as against May. This along with the increase in folio numbers indicates that gold as an asset class has been attracting a greater number of investors,” mentioned Himanshu Srivastava, Associate Director – Manager Research, Morningstar India, commenting on Gold ETFs based on AMFI month-to-month information for June 2021.
From January 2020 till June 2021, the category has received a net inflow of Rs 9,737.14 crore. Gold functions as a strategic asset in an investor’s portfolio, provided its capacity to act as an successful diversifier, and alleviate losses for the duration of challenging industry circumstances and financial downturns.
This is exactly where it draws its secure-haven appeal. During the difficult investment atmosphere more than the last couple of years, gold emerged as one of the much better performing asset classes, hence proving its effectiveness in investors’ portfolio. Expectedly, this has attracted investors interest, and continues to do so, which is evident from the constant net inflows into the Gold ETF category.
Priti Rathi Gupta, Founder, LXME (India’s initially economic platform for girls), mentioned, “Gold ETFs saw an increased inflow from Rs 287 crore in May to Rs 359 crore in June. Even though debt funds haven’t given great yields in the past term and gold has also surged, yet it is observed that investors are turning in their equity investments to invest in debt funds and gold.”
As the industry is also higher, investors sort to portfolio rebalancing to safeguard their capital against industry volatility. “In an all-time high market and the prevailing overall uncertainty, investors are wary and want to safeguard the immediate future. Also, investible surplus is seeing a crunch due to the second wave of Covid and the slowdown of economy.”