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Informist, Friday, May 9, 2025

By J. Navya Sruthi

MUMBAI – Gold exchange-traded funds recorded a net outflow for the second consecutive month in April despite a bull run in gold prices during the month. Experts said investors withdrew more money in April to book profits and expect the outflow to continue for the next couple of months.

The 20 gold ETFs saw a gross inflow of INR 16.63 billion in April and redemptions worth INR 16.69 billion, resulting in a net outflow of INR 58.20 million, according to data released Friday by the Association of Mutual Funds in India. However, the gross inflow in April was higher than in March, when the gross inflows were at INR 9.78 billion. This resulted in a 92% month-on-month fall in net outflows, from INR 770 million in March. These funds also recorded a massive fall in outflows on year, with a net outflow of about INR 3.96 billion in April 2024. 

"The outflow we have seen in gold ETF is very minuscule," AMFI Chief Executive Venkat Nageswar Chalasani said in a media call. The outflow could mostly be on account of investors selling for profit, considering the sharp rally in gold prices, Chalasani said.

Despite the outflow, the assets under management of the 20 gold ETFs at the end of April were INR 614.22 billion, nearly 4% higher on month, due to higher gold prices, analysts said. Gold prices hit multiple highs in April on both COMEX and the Multi Commodity Exchange of India following the imposition of tariffs by the US and continuing geopolitical uncertainties.

In April, LIC MF Gold ETF gave the highest monthly return of 6.76%, and Nippon India Gold Savings – Direct Plan, DSP Gold ETF Fund of Funds - Direct Plan, ICICI Pru Regular Gold Savings Fund of Funds - Direct Plan, Tata Gold ETF Fund of Funds - Direct Plan, and UTI Gold ETF Fund of Funds - Direct Plan were among the top 10 in terms of returns, as per data from Value Research. The lowest return of 2.66% was seen in Motilal Oswal Gold and Silver ETFs Fund of Funds - Direct Plan, the data showed. 

Meanwhile, gold on the Multi Commodity Exchange of India in April gave a return of 4.6%, down from 5.6% in March. Although gold prices hit record highs during April, prices began falling in the final third of the month as signs of the trade tensions between the US and China easing began to appear. The most-active June contract on MCX hit an all-time high of INR 99,358 per 10 gm on Apr. 22, up about 10% from INR 90,503 per 10 gm, the closing price on Apr. 1.

Ajay Kedia, director, Kedia Advisory, said it is likely that there will be a net outflow in the next couple of months. "As an investor, whenever I see that gold has already rallied, I would be slightly cautious because, right now, I have got a very good return in gold."

Investors are currently waiting for gold prices to fall to around INR 90,000 per 10 gm and then they will reinvest in the commodity, Kedia said. Despite global uncertainties, one cannot expect higher returns from gold as all the factors supporting gold prices have already been factored in, he added.

At 1910 IST, the most-active June gold contract was almost 0.1% higher at INR 96,178 per 10 gm. So far during the calender year, gold has delivered a return of over 25% on the MCX.

On Apr. 30, the number of folios in gold ETFs was over 7.1 million, up from 7.0 million a month ago. According to AMFI data, in April, there were no new schemes launched by any of the fund houses.  End

Edited by Rajeev Pai

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