With equity markets running on a positive streak and turning expensive, investors have latched onto gold as a safe investment option. Consequently, gold exchange-traded funds (ETFs) witnessed staggering net inflows of over Rs 2,400 crore in the three months ended September, as investors continued to hedge their exposure to riskier assets due to higher economic uncertainty resulting from COVID-19. In comparison, investors had infused Rs 172 crore in this asset class in July-September 2019, according to the data available with the Association of Mutual Funds in India (Amfi). The category has been among the better-performing ones so far this year and received a net inflow of Rs 5,957 crore. As per the data, a net sum of Rs2,426 crore was pumped into gold-linked ETFs in three months ended September 30, 2020.
Divam Sharma, the co-founder at Green Portfolio, said returns generated by gold ETFs over the last one year have increased the number of investors buying the asset. "Gold investment picked up due to higher economic uncertainty resulting from COVID-19," said Harsh Jain, co-founder of GROWW. Investors expected to see very volatile markets the world over, and in such times, investment in very safe assets like gold always shoots up. Even though now, the markets have mostly recovered and reached the pre-pandemic levels, uncertainty remains high going forward, Jain said
The inflows led assets under management (AUM) of gold funds surging to Rs 13,590 crore at the end of September 2020, from Rs 5,613 crore at the end of September 2019. Gold-backed ETFs are passive investment instruments that are based on price movements and investments in physical gold.
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