In the first half of 2020, gold ETFs (exchange traded funds) saw hefty net inflows of over Rs 3,500 crore as investors continued to hedge their exposure to riskier assets amid the COVID-19 crisis. In comparison, investors had pulled out Rs 160 crore from this asset class in January-June 2019, according to the latest data available with the Association of Mutual Funds in India (AMFI).
Gold has been one of the better-performing asset categories since the US-China trade war as the metal gains amid uncertain situations. Since August 2019, gold ETFs have received net inflows of Rs 3,723 crore.
Month-wise between January and June, investors put in a net Rs 202 crore in January, Rs 1,483 crore in February, but withdrew Rs 195 crore in March on profit booking.
Inflows resumed in April at Rs 731 crore, followed by Rs 815 crore in May and Rs 494 crore in June.
Investors continue to hedge their exposure to riskier assets by investing in gold, as the threat of coronavirus pandemic continues to loom.
For a strategic investor, the precious metal allows diversification in his/her investment portfolio and hedge their exposure to volatile stock markets.
It has a safe-haven appeal, which has been on full display in 2019 and so far in 2020, as the yellow metal is witnessing one of its best rallies after 2011.
The inflows meant assets under management (AUM) of gold funds surged more than two-fold to Rs 10,857 crore at the end of June 2020, from Rs 4,930 crore at the end of June 2019.
Gold-backed ETFs are passive investment instruments that are based on price movements and investments in physical gold.