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Informist, Friday, Apr. 11, 2025

By J. Navya Sruthi

MUMBAI – At a time when gold prices are zooming and reaching newer highs every other day, gold exchange traded funds saw investors withdrawing more money from such funds in March than putting new money. As a result, for the first time in 11 months, gold ETFs reported net outflows in the month, according to AMFI data released Friday. 

The 20 gold ETFs saw a gross inflow of INR 9.78 billion in March and redemption of INR 10.56 billion, resulting in net outflows of INR 772.1 million. The gross inflows in March were much lower than INR 27.60 billion in February. In March 2024, the net inflows were at INR 3.73 billion.

"Earlier we used to consume gold but from the time (gold) ETFs were launched, people also see gold with an investment point of view. So (in March) investors booked profits to cover losses made in equities by selling gold," Ajay Kedia, director of Kedia Advisory, said. In the short-term, we may see some profit booking in gold as the precious metal has rallied, he added. Also, equities corrected and investors see this as an opportunity to invest in equities, which may also weigh on gold inflows, the analyst said.     

Despite the high outflows, the assets under management of 20 gold ETFs at the end of March were INR 588.88 billion, nearly 6% higher on month, due to high gold prices, analysts said. Gold prices hit multiple high in March on both the COMEX and the Multi Commodity Exchange of India on back of fears of trade war then. 

In March, gold price on the MCX rose to an all-time high of INR 90,284 per 10 gm and closed at INR 90,120 per 10 gm. Earlier in the day, gold prices again rose to a fresh record time high of INR 93,887 per 10 gm.

On Mar. 31, the number of folios in gold ETFs was about 7 million, up from 6.8 million a month ago. According to AMFI data, in March, 360 One Gold ETF launched a gold ETF scheme with the funds mobilising INR 120 million. 

In March, Quantum Gold ETF gave highest monthly return of 6.71%, while Invesco India Gold ETF, LIC MF Gold ETF, ICICI Pru Gold ETF Reg, Axis Gold ETF, and SBI Gold ETF were among top 10 in terms of returns, per data from Value Research. The lowest return of 4.05% was seen in ICICI Pru Regular Gold Savings (Fund of Funds) Dir, the data showed. Meanwhile, on the MCX, gold gave a return of 5.6% in March.

OUTFLOWS: ONE OFF

With the ongoing geopolitical tensions and trade war between the US and China, analysts said outflows in gold ETFs is one off and with a positive outlook for gold metal, they see net flows continuing into gold funds. 

"Very quickly, we have experienced a very high year-on-year growth on the year (in gold prices). And there is a pause as people are in a wait and watch mode and therefore we are seeing a small negative growth but I don't see it as a trend," AMFI Chief Executive Venkat Nageswar Chalasani said in a media call. 

Gold prices surged and so we can expect some outflows in gold ETFs due to profit booking, but the long-term view still remains positive which shows that net flows into gold funds will continue, Kedia said.  End

Edited by Akul Nishant Akhoury

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