Gold ETF Saw Record Net Inflows In March; Should You Invest in Gold ETF?

Gold ETFs are represented by physical gold bars with a purity of 99.5%. Gold ETF prices are available on the BSE/NSE website, and they can be bought or sold at any time through a stockbroker. According to the latest AMFI data, investors appear to have turned their attention to Gold ETFs, as monthly flows in Gold ETFs increased by 35% (MoM) in March 2021. In March 2021, net investments in gold ETF schemes totalled Rs 662 crore, up from Rs 491 crore the previous month.

Gold is regarded as an inflation hedge, and experts recommend allocating 10-15% of one's portfolio to gold.

Gold prices, which had soared to record highs of Rs 56,200 in August 2020, have fallen by about Rs 10,000 - Rs 12,000 since then.

Gold ETFs have benefited from the recent drop in gold prices. Gold prices have come under pressure as a result of a stronger-than-expected economic recovery and a hardening of US bond yields, with prices down around 21% from their peak.

From 5.26 lakh in March 2020 to 12.99 lakh in March 2021, the number of new folios added to the Gold ETF category more than doubled to 12.99 lakh. In March 2021, it increased by 16% over the previous month. Gold ETF had Rs 14,122 crore in net assets under management as of March 31, 2021.

Should You Invest in Gold ETF?

Gold exchange-traded funds (ETFs) are passive investment vehicles based on gold prices. They are less expensive than physical gold investments. Furthermore, this purchase will be made in electronic form, removing the hassles of storage and security, as well as the concern about gold purity.

Gold ETFs, according to industry experts, are ideal for investors who want high liquidity from their gold investments. Gold ETFs can be purchased through a Demat account, which also allows investors to invest in them as SIPs.

When it comes to purchasing gold, especially for investment purposes, gold coins and bars are the most popular choices. However, when all factors are considered, gold ETFs emerge as the best gold investment vehicle. Unlike gold jewellery, gold ETFs can be bought and sold at the same price all over India.

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