Gold ETFs Fails to Attract Indian Investors

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(My Digital FC, Chennai) – Despite the gold demand growth in April and May, Indian investors didn’t touch gold ETFs.

Gold price recorded a historical decline in April, and continued to fall during the Indian Akshaya Tritiya religious festival. Indian investors and consumers approached gold in physical and paper forms, but gold ETFs didn’t appeal them.

In April during the demand’speak, gold ETFs reported outflow in terms of Indian rupees by 360 million rupees and 50 million rupees in May. Gold ETFs experienced net outflows since February,yetcontinuing in a slower pace.

The Association of Mutual Funds of India reported a decrease in the total assets under management of gold ETFs from 120.57 billion rupees in January to reach 105.8 billion rupees in May. The outflow reached 12.26% of gold ETFs value in merely 5 months.

Chirag Mehta, an Indian fund manager of Quantum AMC said that this outflow was due to profit-booking, gaining profit by selling shares, in the past few months. The data was a surprise because the demand on gold ETFs was acceptable in April and May, he added.

India, the world’s number one gold consumer, might be more attracted to physical gold more than any other forms, but due to the recent government measures to curb gold imports, Indian investors might be forced to look for alternative investments like gold ETFs and began a new trend in gold investment.