After seven consecutive months of net inflows, the Gold ETF category witnessed net outflows in November to the tune of Rs 141.1 crore, largely on the back of profit booking by investors, as per AMFI’s month-to-month information for November 2020.
Gold costs came-off their all-time higher in current occasions, following witnessing nearly an uninterrupted rally this year. Also, “with positive development around the Covid vaccine, economies moving towards normalcy and equity markets doing well, there is uncertainty over the direction of gold prices going ahead. Given this scenario, and with the prices still at elevated levels, investors would have found this as an opportune time to book profit,” stated Himanshu Srivastava, Associate Director – Manager Research, Morningstar India.
Gold, in truth, functions as a strategic asset in an investor’s portfolio, offered its capability to act as an productive diversifier, and alleviates losses throughout difficult marketplace situations and financial downturns. This is exactly where it draws its protected-haven appeal, which has been on complete show due to the fact 2019.
However, most of the debt-oriented categories witnessed net inflows in the month of November, even though the pace of net inflow was decrease than the earlier month. Through November, debt categories recorded a net inflow of Rs 44,938.8 crore, which was drastically decrease than the net inflow of Rs 110,466.5 crore in October. The debt categories which pulled the all round net inflow figure down had been Overnight Fund and Liquid Fund, as each witnessed net outflows throughout the month.
“Investors continue to focus on fixed income categories having relatively shorter duration profile. Hence categories such as Ultrashort, Low Duration, Money Market and Short Duration Funds received good net flows during the month. In fact, Low Duration category received the highest net inflow in November. In addition to that, funds with pristine credit quality, especially from categories such as Banking and PSU Fund and Corporate Bond, continue to gain traction from investors highlighting their preference for safety in these segments. Money Market funds have also been the beneficiary of this trend,” stated Srivastava.
The net outflows from the Credit Risk category has moderated very substantially more than the final handful of months. During November, the category witnessed a net outflow of Rs 15.4 crore, which was sharply decrease than the net outflow of Rs 414.8 crore in October. Compared to October, the quantity of folios has elevated, the fund mobilised has gone up whereas the redemptions have come down. Although there continues to be cautiousness, the information also indicates that investors have began to progressively open up towards this category. The credit threat category has been losing assets regularly, the pace of which shot up substantially throughout the peak of the liquidity crises in the month of April this year.
The flows into the Medium Duration category continue to improve month following month. In November, the category received a net inflow of Rs 1,761.1 crore, larger than the net inflow of Rs 1,566.1 crore in October. Since July, the category has recorded a net inflow of Rs 6,012.7 crore.
This category homes some credit-oriented techniques and suffered drastically throughout the March, April and May period of liquidity crises. From March 2020 till June 2020, the category witnessed a net outflow of Rs 10,274 crore. However, “since then, the credit profile of these funds has improved with higher investments in AAA or equivalent rated securities. Also, on the duration front, the category is positioned well in the current environment. This continues to attract investors towards the category,” stated Srivastava.