Gold ETFs May Not Lose Sheen Despite Decline In Gold Prices

Monday, March 25, 2013
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Mumbai: Despite the falling prices of the yellow metal, gold ETFs (exchange-traded funds) will remain attractive as an asset class in the near future, say industry players.

“Gold ETFs will remain attractive as an asset class. A trend can’t be drawn from the fall in the AUMs for one short period,” IDBI Mutual Fund chief executive Debashish Mallick said.

After recording net inflows for seven consecutive months, gold ETFs witnessed a net outflow as investors booked profits to invest in equities and other asset classes.

The net outflows, although a small amount of Rs.8 crore, has happened on the back of falling gold prices, which witnessed a dip of around 2.5 per cent drop in the first three months of 2013.

Mallick also said though it is difficult to take a call on the price movement of the yellow metal, gold ETF remains a good source for portfolio diversification for an investor

Similarly, Reliance MF chief executive Sundeep Sikka said gold remained a source of sound return for retail investors. “We see gold as a very attractive return asset class for retail investors,” Sikka said.

Quantum MF also said this trend of outflow may not continue in the near future.

“Equities have not preformed on the expected lines as projected before. Also, there is only a chance of arbitrage in the fixed income category. So, gold ETFs remain as an attractive category despite the recent outflow,” Quantum MF chief executive Jimmy A Patel said.

He further said the latest data of outflow in gold ETF couldn’t be regarded as a generic trend.

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Source: PTI
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