Gold ETFs continues to lose sheen as an investment class

New Delhi: As per the latest data by mutual fund body Amfi, Gold exchange-traded funds (ETFs) continued to lose sheen as an investment class as investors pulled out over Rs 420 crore from such instruments in April- October 2017.

Moreover, trading in gold ETF has been lukewarm in the last four fiscals. It had witnessed an outflow of Rs 775 crore in 2016-17, Rs 903 crore in 2015-16, Rs 1,475 crore in 2014-15 and Rs 2,293 crore in 2013-14.

On the other hand, equity and equity-linked saving scheme (ELSS) saw an infusion of over Rs 96,000 crore during the first seven months (April-October) of the ongoing financial year. This included an investment of close to Rs 17,000 crore in the last month alone.

Stock markets have been on an upswing, touching new highs this year.

Gold ETFs are passive investment instruments that are based on price movements and investments in physical gold.

According to the latest data available with the Association of Mutual Funds in India (Amfi), a net sum of Rs 422 crore was pulled out from 14 gold-linked ETFs during April-October period this year.

Meanwhile industry officials and analysts recently said that India's gold imports in the October-December quarter of 2017 could drop by a fourth from a year ago due to weak demand during key festivals and as investors seek better returns from riskier assets like equities.

Lower gold purchases by India, the world`s second-biggest consumer after China, could drag global prices that have already fallen nearly 6 percent from this year`s peak.

In the first nine months of 2017, the country`s gold imports surged 131 percent to 638.4 tonnes, according to GFMS data, as jewellers advanced buying in the first half of the year ahead of a sales tax hike that took effect from July 1.

Gold demand usually strengthens in the final quarter as Indians brace for the wedding season as well as festivals such as Diwali and Dussehra, when buying bullion is considered auspicious.

With PTI Inputs