Gold exchange-traded funds (ETFs) offered by domestic mutual funds logged their first monthly outflows in five months, a report by Business Standard stated.
In July, these investment vehicles saw net outflows — the difference between the amount mobilised and the redemptions — of ₹457 crore, the report noted. This was only the third month of net outflows in the past year.
In June Gold ETFs saw net inflows of ₹135 crore, which was down 34 percent from ₹203 crore in May.
However, in 2022 so far, April witnessed the highest net inflows in gold ETFs at ₹1,100 crore, added the report. The year began with the gold ETFs witnessing outflows in January and February, as per the report. However, it saw a recovery in March, when the inflows came in at ₹205 crore, the report further informed.
As per BS, the latest bout of outflows comes amid a sharp surge in the equity markets. In July, the benchmark Nifty rallied by nearly 9 percent. Typically, risk assets and safe havens, such as gold, move in opposite directions, it pointed out. When markets tend to correct, investors seek refuge in gold, added BS.
Globally, over $4.5 billion got yanked out of gold ETFs. So far this calendar year, however, gold ETFs have seen net inflows of $10 billion, informed the report.
By comparison, inflows into domestic gold ETFs were muted at ₹490 crore on a year-to-date (YTD) basis, it noted. Domestic gold prices are up 7 percent YTD, even as the Nifty is flat after the latest upmove.
What are gold ETFs?
Gold ETFs (exchange-traded funds) are passively managed funds and a way more convenient form of investment as compared to physical gold. 1 unit of gold ETF equals 1 gram of gold and the gold prices are reflected without any additional fees. These are traded on exchanges in real-time and unlike physical gold, prices of gold ETFs do not vary statewise.