Gold ETFs FY23 inflow declines 74%, highlights investors' preference for equities

India’s gold imports also witnessed a steep fall due to increase in import duties, global uncertainties and rising prices of the yellow metal

Inflow in gold exchange-traded funds (ETFs) dropped 74 percent year-on-year (YoY) to Rs 653 crore in FY23 due to profit booking in gold and investors' preference for equities, reports suggest.

Meanwhile, the asset base of gold ETFs and investors' account or folio numbers increased in the last fiscal, data from the Association of Mutual Funds in India (AMFI) showed.

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India’s gold imports also witnessed a steep fall as they plunged 24.15 percent to $35.01 billion from $46.16 billion YoY due to an increase in import duties, global uncertainties and rising prices of the yellow metal.

Investors are reportedly preferring equity-oriented mutual funds over other assets, with the segment registering a net inflow of over Rs 2 lakh crore in FY23. Investors have also redeemed their investments in gold in favour of other asset classes.

According to data from the AMFI, 14 gold-linked ETFs witnessed an inflow of Rs 653 crore in FY23, way below the Rs 2,541 crore inflow seen in the segment in FY22 and Rs 1,614 crore in FY20.

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While retail investors poured more money into equities compared to gold ETFs over the last few years on account of decent returns, experts believe an uptrend of gold in CY23, as fears of recession traverse across many developed nations.

Gold, with its superlative performance over the last few years, has attracted significant investor interest and the consistent surge in its folio numbers is a testimony of the same. The folio numbers in gold ETFs surged by 4.58 lakh to 47 lakh in March 2023 from 42.42 lakh YoY, shows investors' inclination towards gold-related funds.

Gold ETFs, which track the domestic physical gold price, are passive investment instruments that are based on gold prices and invest in gold bullion.

(With agency inputs)