The bull run in gold prices in October appears to have enticed investors to move money into gold exchange traded funds as inflows hit a new record of Rs 1,962 crore during the month.
This was the sixth consecutive month of net inflows into gold ETFs — passive investment instruments that track gold prices, according to data released by the Association of Mutual Funds in India on Monday. In August, inflows had soared to a record Rs 1,611 crore, but dipped to Rs 1,233 crore in September.
Net assets under management of gold ETFs in India stood at Rs 44,545 crore last month. It is to be noted that the AUM also reflects the appreciation in prices.
The AUM has jumped 59% from October 2023, as investors increasingly turn to the proxy and tax-efficient way of investing in gold without the hassle of physically storing it.
Gold prices gained as much as 5.3% in the domestic spot market last month on festive demand.
"This festive season, inflows into Indian gold ETFs have outshined physical gold purchases, underscoring a shift toward investment over consumption," said Sugandha Sachdeva, founder of SS WealthStreet.
She said as multi-asset strategies become more popular, gold ETFs provide an efficient means of diversification. Moreover, the lack of new sovereign gold bond issues by the government has further boosted inflows, solidifying gold ETFs as a strategic choice for wealth protection and growth in uncertain times.
The RBI has not issued fresh SGBs since February this year. The eight-year bond bears a 2.5% annual interest.
Global gold ETFs saw inflows six months in a row, attracting $4.3 billion in October, according to the latest World Gold Council data. Recent inflows and the record-shattering gold price pushed global gold ETFs' total AUM to $286 billion, while holdings rose 43 tonnes to 3,244 tonnes.
Inflows Into Mutual Funds
Total inflows into the mutual fund industry stood at Rs 2.4 lakh crore. The industry saw outflows worth Rs 71,114.08 crore during the month of September.
Actively managed equity mutual funds recorded fresh record in inflows during October. Inflows into equity funds rose 21.7% to Rs 41,886.7 crore.
The SIP contribution reached a new record high at Rs 25,322.74 crore in October, contributing up to 20% of total assets under management of the industry. In comparison, the SIP contribution stood at Rs 24,508.73 crore in September and Rs 23,547.34 crore in August.
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