Net inflows into gold ETFs for FY12 amounted to R3,646
crore, a 59% increase over the R2,289 crore garnered in the previous fiscal,
data from industry body Amfi shows.
The figure is 43 times more than the amount collected in
FY09, the year the global financial crisis shook world markets. Assets under
management (AUM) for the category in FY12 have more than doubled over that in
the previous fiscal, and multiplied more than 20 times in the past five years.
“Risk aversion among investors was pretty high for much of
last year, which made them turn to gold, which is perceived as a safe haven,”
said Nitin Rakesh, CEO, Motilal Oswal Asset Management Company. He added that
the bull run in the yellow metal also made the yellow metal attractive:
“Investors tend to flock to asset classes that are doing well.”
Gold ETFs as a category gave returns of about 34% for the
financial year 2012, according to data compiled by Value Research. Gold prices
appreciated as much as 35% in the period, touching R28,040 on the last day of
the year.
Currently, a dozen gold ETFs are in operation.
According to Kishore Narne, senior VP and head —currency
& commodity—Anand Rathi Securities, the psychological affinity Indians have
towards gold made them invest in the commodity despite the sky-high prices.
“Gold has been the best performing asset over the past 10
years. It is a hedge against inflation, which has remained stubbornly high in
the past two years,” said Mahendra Jajoo, CIO —fixed income— Pramerica Asset
Managers.
Compared to gold, most other asset classes underperformed
last year. For instance, industrial metal silver slipped 1%, while Indian
equities as measured by the benchmark BSE Sensex slipped by more than 11%
during the year. Debt fared better, with average category returns for FY12
clocking a little over 9%. According to market participants, Indian investors
have grown more comfortable with investing in gold ETFs over the past two years.
This change in mindset, in turn, encouraged several fund
houses to launch gold ETF products over this period. More specifically, inflows
into this category last year were boosted by the launch of several gold fund of
funds.
“At least 8-9 gold fund of funds were launched last year,
which gave a significant boost to the assets under management of gold ETFs,”
pointed out Rakesh.
Market participants believe that inflows into gold ETFs are
likely to remain robust going forward unless the equity market starts outperforming.
According to a recent statement by Thomson Reuters GFMS, one of the world’s
leading economics consultancies in precious metals, the more-than-decade-long
bull run in gold may come to end in early 2013 if prices touch new highs.
Source: http://www.financialexpress.com/news/inflows-into-gold-etfs-at-5yr-high/936115/0
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