Gold ETF Inflow Hits 5-Month High in June

New Delhi, Jul 10 (PTI) Gold Exchange Traded Fund (ETF) attracted a net sum of Rs 2,081 crore in June, making it the highest monthly inflow in five months, driven by resilient prices of the yellow metal, geopolitical uncertainties and volatility in equity markets.

This came following a net inflow of Rs 292 crore in May. Before this, the category witnessed a net outflow of Rs 6 crore in April and Rs 77 crore in March, data with the Association of Mutual Funds in India (Amfi) showed.

With this, net inflows in Gold ETFs crossed Rs 8,000 crore in the first half of the year (January-June).

The inflow led to an expansion in the category's assets under management by nearly 4 per cent to Rs 64,777 crore in June from Rs 62,453 crore in May.

"The robust inflows in June indicate a decisive shift in sentiment, likely supported by resilient gold prices, geopolitical uncertainties, and volatility in equity and fixed income markets, which have revived gold's appeal as a safe-haven asset," Nehal Meshram, Senior Analyst-Manager Research, Morningstar Investment Research India, said.

The inflow in June was the highest monthly inflow since January, when Gold ETFs attracted Rs 3,751 crore.

In June, two new Gold ETFs were launched, collectively mobilising Rs 41 crore.

"While the fund mobilisation through new launches remained modest, it adds to the broader recovery in flows and reflects steady investor interest in the asset class," Meshram said.

Gold, with its superlative performance over the last few years, has garnered substantial investor interest, and the consistent increase in folio numbers serves as a testament to its attractiveness.

The folio numbers in gold ETFs rose by 2.85 lakh to 76.54 lakh in the month under review from 73.69 lakh in May. This suggests a growing inclination among investors towards funds related to gold.

Gold ETFs, which aim to track the domestic physical gold price, are passive investment instruments that are based on gold prices and invest in gold bullion. In short, Gold ETFs are units representing physical gold, which may be in paper or dematerialised form.

One gold ETF unit is equal to 1 gram of gold and is backed by physical gold of very high purity. They combine the flexibility of stock investments and the simplicity of gold investments.