Amid geopolitical stress and economic slowdown world over, net inflow in Gold exchange-traded funds in January surged to their highest level in seven years to Rs. 200 crore as investors preferred lapping up the safe-haven. As per the latest data with Association of Mutual Funds in India (Amfi), there has been a net influx to the tune of Rs. 202 crore into Gold ETFs in January in contrast to just Rs. 27 crore in December last year.
With this it is for the third-straight month, when there has been net inflow in gold-linked ETFs. In November, gold ETFs registered a net inflow of Rs. 7.68 crore. Nonetheless, in October month, investors pulled out Rs. 31.45 crore from such funds. While in August and September there was infusion into the safe-haven asset to the tune of Rs. 145 crore and Rs. 44 crore, respectively.
"Gold ETFs witnessed a strong net inflow in the month of January. This was significantly higher than Rs 27 crore, which the segment received in the month of December. Geopolitical tensions in different parts of the globe and slowdown in global economy led investors to opt for safe-haven like gold over the last one year," Himanshu Srivastava, Senior Research Analyst - Manager Research, Morningstar Investment Adviser India is quoted in a PTI report as saying.
"The appeal of yellow metal enhanced recently on the back of rising concerns over the severity of the coronavirus outbreak. As the investors weigh the fallout of the epidemic, they have increased their allocation to gold for its safe-haven appeal," he added.
In December 2012, the asset class witnessed a net influx of Rs. 474 crore and since then the latest inflow reported for January month is the highest.
Also, the total assets under management of gold funds spiked higher by 7.6% to Rs. 6207 crore in January end as compared to Rs. 5,768 crore in December end.
Gold-linked ETFs are passive investment avenues that are based on gold prices and invest in gold bullion.