Gold exchange-traded funds (ETFs) continue to be off investor radar as net inflows came in at a paltry ₹147 crore in October, a report by Business Standard stated. Since the start of the calendar year 2022 (CY22), the report noted that monthly net inflows into gold ETFs have either remained low (in the range of ₹100-350 crore) or in negative territory.
Net inflows were on the higher side only once in CY22, when the figure touched ₹1,100 crore in April, the report revealed, quoting data from the Association of Mutual Funds in India.
It added that Gold has not done well as an asset class in the past year.
According to Value Research data, gold ETFs have delivered around 5.5 percent returns in the one-year period ended November 11. However, their performance is still better than a majority of equity and debt funds that have struggled due to high inflation, rising interest rates, and geopolitical factors, explained the report.
However, it noted that the poor performance by the yellow metal has not affected the demand for physical gold.
According to the Gold Demand Trends Q3 2022 report by the World Gold Council (WGC), India’s gold demand reached pre-pandemic levels during the July-September period, with 14 percent growth, informed the report.
It added that India’s total demand during the quarter was 191.7 tonnes, mainly driven by strong consumer interest, observed the WGC report.
A gold ETF is an exchange-traded fund (ETF) that attempts to replicate the price of physical gold. They are passive investment products that invest in gold bullion based on gold prices. Gold ETFs are, in a nutshell, units representing physical gold that may exist in paper or digital form. One gold ETF unit is equivalent to 1 gm of gold and is backed by highly pure physical gold.