Investors Deploy Record Rs 1,611 Crore In Gold ETFs As Prices Lure

Investors deployed a record Rs 1,611 crore in gold exchange-traded funds in August, while prices of the yellow metal remained range bound in the domestic market.

This was the fourth 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 Tuesday. In July as well, the investment was a record Rs 1,337 crore.

Net assets under management of gold ETFs in India stood at Rs 37,390 crore last month. It has jumped 65% in a year as investors increasingly turn to the proxy and tax-efficient way of investing in gold without the hassle of physically storing it.

Nippon India ETF Gold BeES — the country's top fund in the segment that manages over Rs 12,000 crore — has given 15% returns in the last year.

Prices hovered between Rs 69,000 and Rs 72,000 per 10 grammes last month even as globally, the yellow metal hit new highs. Finance Minister Nirmala Sitharaman, in her budget, announced a reduction in basic customs duty on gold and silver from 10% to 6%, dampening prices.

Global gold ETFs saw inflows four months in a row, attracting $2.1 billion in August, according to the latest World Gold Council data. Recent inflows and the rising gold price pushed global gold ETFs' total AUM to $257 billion, while holdings rose to 3,182 tonnes.

Net flows into mutual funds fell 43% in August, led by a decline in debt-oriented schemes. There was an inflow of Rs 1.08 lakh crore against an inflow of Rs 1.89 lakh in July. Net assets under management increased to Rs 66.7 lakh crore in August from Rs 65 lakh crore in July.

Inflows into equity mutual funds increased during the month after a decline in July, led by a rise in the inflows into sectoral and thematic funds.

Equity inflows increased 3% to Rs 38,239.2 crore last month against Rs 37,113.4 crore in July.