Inflow in Gold ETFs surges 45 per cent to Rs 625 crore in January

After witnessing a net outflow of Rs 141 crore in November 2020, the Gold ETF category is once again back under investors' radar.

New Delhi: Investors put in Rs 625 crore in gold exchange traded funds (ETFs) in January, 45 per cent higher than the preceding month, on expectation that the yellow metal will perform well going forward.

The inflow pushed the asset base of gold funds by 22 per cent to Rs 14,481 crore at the end of January from Rs 14,174 crore at the end of December, data available with Association of Mutual Funds in India showed.

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After witnessing a net outflow of Rs 141 crore in November 2020, the Gold ETF category is once again back under investors’ radar. While it received a net inflow of Rs 431 crore in December, the net inflow in January was even higher at Rs 625 crore.

Himanshu Srivastava, Associate Director – Manager Research, Morningstar India said the gold prices have come-off its all-time highs touched in August last year. The month of January also saw fair bit of correction in its prices.

“This, along with expectation that gold may do well going ahead provided a good buying opportunity to investors, which resulted in net inflows for the category in January,” he added.

Barring March and November, such instruments had seen a net inflow in the entire 2020. Gold ETFs had attracted Rs 6,657 crore last year, much higher than just Rs 16 crore inflow seen in 2019.

According to Srivastava, gold functions as a strategic asset in an investor’s portfolio, given its ability to act as an effective diversifier, and alleviate losses during tough market conditions and economic downturns. This is where it draws its safe-haven appeal, as has been evident since 2019.

From January 2019 till January 2021, the category has received a robust net inflow of Rs 48,159 crore.