Despite a rise in the prices of gold during the past few months, gold Exchange Traded Funds (ETF) offered by domestic mutual funds are yet to see any major inflows from investors.
Despite a rise in the prices of gold during the past few months, gold Exchange Traded Funds (ETF) offered by domestic mutual funds are yet to see any major inflows from investors. While the outflow from gold ETFs continued in April, the pace of redemption has slowed down due to a rally in gold prices amidst uncertainty in the global economy.
According to the latest data released by Associa-tion of Mutual Funds in India (AMFI), gold ETF saw a net outflow of Rs 69 crore in April 2016. In FY16, investors pulled out Rs 903 crore, the third consecutive year of selling. During the preceding two financial years, investors had pulled out Rs 1,475 crore and Rs 2,293 crore from gold ETF as an upbeat sentiment in the stock market drove investors away from the yellow metal.
“We asked investors to refrain from buying gold in 2014 due to our view on gold and the penalising premiums prevailing at that point of time. We were of the view that 2015 was a good time to allocate to gold, as prices were beaten down by speculative selling in anticipation of the Us Fed rate hike,” observed Chirag Mehta, senior fund manager, alternative investment, Quantum AMC.
However, given the global macro-economic factors, Mr Mehta believes any downside in gold prices would be limited and likely to attract significant buying on any meaningful corrections.
“Fundamentally, gold seems to be on a solid footing as central bankers have again hit the wall. Gold should benefit as central bankers attempt further measures thro-ugh more newer, unconventional and untested approaches to revive growth,” he said and added that investors seems to be concerned over eroding effectiveness or far reaching negative consequences of unconventional monetary mea-sures like QE and negative interest rate policies.
