Gold ETFs lose sheen, investors withdraw Rs 280 crore in Apr-Nov period; AUM down 11%

Industry experts said positive returns given by the equity market have resulted in Indian investors largely staying away from investing in gold ETFs. In fact, redemptions have been seen in the past five years.

They said Indian investors have traditionally preferred to hold gold in physical form, rather than ETFs which are actually a better form of holding from an investor’s perspective. Ideally, investors should look to allocate 5-10 per cent of the portfolio towards gold, which works as a portfolio hedge and helps reduce overall portfolio volatility.

Gold ETFs are passive investment instruments that are based on price movements and investments in the metal.

On the other hand, equity and Equity-Linked Savings Scheme (ELSS) saw an infusion of over Rs 82,200 crore in the April-November period of the ongoing fiscal (2018-19) despite volatile equity markets.

“Equity as an asset class has delivered tax-efficient returns, which has beaten inflation albeit with volatility in the short term,” Kotak Mahindra Asset Management Company National Head (Sales and Distribution Alliances) Manish Mehta said.
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