Gold regains its sheen, ETF sees record inflows in August : AMFI data

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Concurrent to a stupendous equity rally, gold, which is often considered a safe haven for investments and works inverse of equity, saw demand. Gold ETFs raked in Rs 1,028.06 crores in August 2023. 

Notes Melvyn Santarita, Analyst – Manager Research, Morningstar India, “In terms of quantum, this was the highest net inflows the category has witnessed over the last 16 months. With continued hike in interest rates in the US, inflation still higher than expectations, and growth rate slowing down, the appeal of Gold as a safe haven and hedge against inflation is expected to continue. Moreover, gold prices in recent times have come-off from an all-time high, thereby providing some buying opportunity”. 

The demand for gold ETFs resurrected sharply since last month, when gold ETFs managed only Rs 456.15 crores worth of inflows. With RBI issuing the latest tranche of sovereign gold bonds (SGBs) at Rs 5,923 per gram, gold is fielding renewed investor interest. 

Large-cap, focussed funds on the downhill 

On the other hand, large-cap funds continued to lose funds, seeing outflows worth Rs 348.9 crores. Apart from these funds, focused funds also saw net outflows worth Rs 471.1 crores, along with equity linked savings scheme (ELSS), which bled Rs 27.89 crores. For the fifth consecutive month, focused funds saw outflows. In July 2023, focused funds saw outflows worth Rs 1,066.72 crores. 

However, as CEO AMFI NS Venkatesh puts it, the revival of investor interest in large-cap funds is only a matter of time. While active funds are finding it hard to beat benchmarks, passive funds are witnessing more investors. For instance, Index funds garnered Rs 1,958.68 crores in August, up from Rs 1,179.26 crores in the month prior to that. In July, other ETFs had seen Rs 353,25 crores worth of outflows, which made a sharp, positive U-turn in August with inflows worth Rs 1,892 crores.