Investors withdraw Rs 773 crore from gold ETFs in FY18 so far

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New Delhi, Mar 11: Investors pulled out Rs 94 crore from gold exchange-traded funds (ETFs) in February, taking the total outflows to Rs 773 crore in the first 11 months of 2017-18 mainly due to poor returns and volatility in prices.
However, experts believe next financial year can be slightly better for gold ETFs as ongoing uncertainty in the global market might increase the demand for the precious metal.
According to the Association of Mutual Funds in India (Amfi) data, a net sum of Rs 94 crore was pulled out from 14 gold-linked ETFs in February, as compared to an outflow of Rs 46 crore in the same month in 2016-17.
In January, a net amount of Rs 110 crore was withdrawn from the instrument.
With the latest outflow, the total pullout has reached to Rs 773 crore in the April-February period of the ongoing fiscal.
Groww COO Harsh Jain attributed the latest outflow to increase in volatility and poor returns. Also, gold bonds, with an additional interest of 2.75 per cent, makes them better instrument than the ETFs.
He said the next fiscal can be slightly better for gold ETFs as ongoing uncertainty in the global market might increase the demand for the yellow metal.
“But in long term, the growing popularity of Bitcoin and other crypto-currencies can be a threat to the gold as an asset class,” he added. Trading in gold exchange-traded funds (ETFs) had been lukewarm in the previous four fiscals. It witnessed an outflow of Rs 775 crore in 2016-17, Rs 903 crore in 2015-16, Rs 1,475 crore in 2014-15 and Rs 2,293 crore in 2013-14.