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

Gold exchange traded funds (ETFs) logged the third straight month of net inflows in May. The quantum of inflows at Rs 203 crore, however, were sharply lower than Rs 1,100 crore registered in April. Domestic gold prices fell close to 2 per cent in May amid forecasts of a slowdown in global economic growth. The benchmark 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 as a safe haven and finds a lot of appeal amongst investors, it lost some of its sheen as gold prices came down post 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’ve witnessed a positive trajectory over 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 gained 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 for gold ETFs stood at Rs 20,262 crore, up 10 per cent year-to-date. Globally, the AUM for gold ETFs is about $226 billion.

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