 "Sales of gold ETFs almost stationary")
The appetite among Indian retail investors for buying gold exchange-traded funds (ETFs) as an investment asset appears to have got over. Amid incessant outflow for over two years, fresh sales of gold ETFs are almost nil.
Continuous weak pricing, coupled with a negative outlook amid strong stock markets, have put investments in gold ETFs off investors’ radar.
In May, there were no sales of gold ETFs, while net outflow was Rs 86 crore, according to the Association of Mutual Funds in India. This has happened for the second time so far this calendar year. The earlier month with no sales was February.
Since 2012-13, the assets under management (AUM) of gold ETFs have nearly halved, to Rs 6,650 crore. Closure of investors’ accounts continue. May was the 24th month when the asset category saw net outflow, as investors kept redeeming units.
According to Milind Barve, managing director of HDFC Mutual Fund, “The good part is those who had been buying into gold and other physical assets for many years are now interested in buying financial assets such as equities.”
Natixis, a UK-based commodity house, in a report on gold authored by Bernard Dahdah, said: “As the fear of a global economic meltdown and debasement of the dollar has dissipated, the opportunity cost of holding the metal has increased. The eagerly anticipated first interest rate hike by the (US) Federal Reserve, which we expect in September, could further raise the opportunity cost of holding the metal.”
Gold ETFs were launched by India’s mutual funds in 2006-07. In March 2007, the asset class had an AUM of Rs 96 crore, rising to Rs 11,648 crore in March 2013 and then declining. Since then, against drying of fresh sales, overall net outflow has been about Rs 4,000 crore. During this time, the number of investors in gold ETFs declined from a little over 600,000 to 466,000.
Continuous weak pricing, coupled with a negative outlook amid strong stock markets, have put investments in gold ETFs off investors’ radar.
In May, there were no sales of gold ETFs, while net outflow was Rs 86 crore, according to the Association of Mutual Funds in India. This has happened for the second time so far this calendar year. The earlier month with no sales was February.
Since 2012-13, the assets under management (AUM) of gold ETFs have nearly halved, to Rs 6,650 crore. Closure of investors’ accounts continue. May was the 24th month when the asset category saw net outflow, as investors kept redeeming units.
According to Milind Barve, managing director of HDFC Mutual Fund, “The good part is those who had been buying into gold and other physical assets for many years are now interested in buying financial assets such as equities.”
Natixis, a UK-based commodity house, in a report on gold authored by Bernard Dahdah, said: “As the fear of a global economic meltdown and debasement of the dollar has dissipated, the opportunity cost of holding the metal has increased. The eagerly anticipated first interest rate hike by the (US) Federal Reserve, which we expect in September, could further raise the opportunity cost of holding the metal.”
Gold ETFs were launched by India’s mutual funds in 2006-07. In March 2007, the asset class had an AUM of Rs 96 crore, rising to Rs 11,648 crore in March 2013 and then declining. Since then, against drying of fresh sales, overall net outflow has been about Rs 4,000 crore. During this time, the number of investors in gold ETFs declined from a little over 600,000 to 466,000.