Investors book profit in gold ETF, withdraw Rs 649 cr in Apr-Jan

Gold exchange-traded funds (ETFs) saw a net outflow of Rs 35 crore in January, taking the total to Rs 649 crore in the first 10 months of the current fiscal, primarily on account of profit booking.

The outflow meant asset under management (AUM) of gold funds plunged by around 11 per cent so far in the current financial year.

Trading in the gold ETF segment has been tepid in the last three financial years. They had witnessed an outflow of Rs 903 crore, Rs 1,475 crore and Rs 2,293 crore in 2015-16, 2014-15 and 2013-14, respectively.

However, the pace of outflow slowed in 2015-16 as against the preceding two years on account of a sluggish equity market.

According to the latest data available with Association of Mutual Funds in India (Amfi), a net sum of Rs 35 crore was pulled out of 14 gold-linked ETFs in January.

This takes the total outflow to Rs 649 crore in the first ten months (April-January) of the ongoing fiscal, 2016-17.

The asset base of gold exchange traded funds dropped to Rs 5,670 crore at the end of January from Rs 6,346 crore in March-end.

"Barring October, gold ETFs have seen net outflows for the whole of this fiscal. October saw net inflows propping up marginally on festival demand and that trend reversed in November and outflow continued till January," FundsIndia.com Head of Mutual Fund Research Vidya Bala said.

"Domestic gold delivered about 15 per cent in the past one year could also have seen some investors, who were waiting for opportunities to exit, book profits in the instrument," she said.

Gold ETFs are passive investment instruments that are based on gold prices and invest in gold bullion. There is a complete transparency on the holdings of an ETF because of its direct gold pricing.