Icra Analytics reveals a significant shift in investor behaviour towards gold exchange-traded funds (ETFs) in India. This trend is driven by factors such as perceived safety, attractive returns, and the convenience offered by ETFs.
"There is a growing appetite for investing in gold ETFs (exchange-traded funds), which are increasingly being considered as safe investments governed by tight regulations,” says Ashwini Kumar, Senior Vice President and Head Market Data, Icra Analytics, “Furthermore, a significant number of these ETFs have delivered exceptional one-year returns exceeding 18 per cent.”
Buying physical gold comes with its fair share of risk, including storage, theft and impurities, thereby impacting the returns. Gold ETFs are comparatively safer as they are governed by tight regulations and are traded on exchanges on a real-time basis. Moreover, the price of gold and its returns in an ETF is the same as physical gold, and the cost of buying a gold ETF is lower as compared to buying the yellow metal, he added.
According to data available on the Association of Mutual Funds in India (AMFI) website, gold ETFs witnessed net inflows to the tune of around Rs 2028.05 crore during the January-March 2024 period, as against net outflows of Rs 300.58 crore January-March 2023. The net inflows have increased by nearly 60.59 per cent from Rs 1262.91 crore registered during the October-December 2023 period.
The net assets under management (AUM) under gold ETF as of 31 March 2024, grew by nearly 37 per cent to touch Rs 31,224 crore, as against Rs 22,737 crore in the same period last year. As of 30 April 2024, the net AUM under gold ETF increased by 43 per cent to touch Rs 32,789 crore, as compared with Rs 22,950 crore in the same period last year.
