India Gold ETFs See First Outflow In Over A Year

Gold exchange-traded funds in India saw a net outflow for the first time in over a year in April, even as prices of the yellow metal touched new highs, driven by heavy central bank demand and geopolitical tensions.

Investors pulled out Rs 395.7 crore from gold ETFs—passive investment instruments that are based on gold prices—in April after 12 consecutive months of inflows, according to data released by the Association of Mutual Funds in India on Thursday. The outflow was also the highest since July 2022, when Rs 456.75 crore moved out of gold ETFs.

The outflows coincided with bullion hitting life highs in mid-April, when it went past the Rs 73,000-mark in the domestic spot market, before retreating to Rs 71,000-levels.

Net assets under management of gold ETFs in India stood at Rs 32,789 crore. It has jumped 62% in two years as investors increasingly turn to the proxy and tax-efficient way of investing in gold without the hassle of physically storing them.

Nippon India ETF Gold BeES, the country's top fund in the segment that manages over Rs 10,700 crore, has given a 15% return in the last one year.

Global gold ETFs saw a continuation of monthly outflows by $2 billion, despite early-April inflows spurred by the gold price strength, the World Gold Council said in its latest report.

Asia led global inflows and demand remained positive from North American funds, though these were dwarfed by European outflows of $4 billion. End April saw global gold ETF holdings fall to 3,079 tonnes, the lowest since February 2020.

The mutual fund industries' net asset under management rose in April after a fall in the previous month, despite the confusion created for the industry by the new know-your-customer rules, which kicked in on April 1.

Net flows recorded an inflow of Rs 2.39 lakh crore, led by debt schemes. This inflow compares to an outflow of Rs 1.59 lakh crore in March that was seen due to the seasonal factor.