Record outflow from gold ETFs on profit-booking in Aug

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Record outflow from gold ETFs on profit-booking in Aug

This article was posted on Sep 10, 2013 and is filed under Market News

Net outflow of Rs 588 crore as investors resort to speculative selling ahead of expected fall

Gold is losing sheen for investors who’d been reaping good returns in recent years through exchange traded funds (ETFs). In August, when India’s overall gold import slipped to a several-year low of eight tonnes, gold ETFs witnessed a record net outflow of Rs 588 crore.

Those in the segment said it was speculative selling. “There were unprecedented redemptions in gold ETFs through last month. I can relate it with a sudden jump in gold prices on the back of the steep rupee depreciation, which made investors book profits,” says the chief executive officer of a mid-sized fund house with a gold fund. Last week, gold prices in India surpassed Rs 34,000 for 10g.

Of the eight months in the current calendar year so far, six saw negative flows; August was the biggest. Interestingly, the large outflows from gold coincided with positive flows into equity funds.

Amid higher redemptions, investors seem to have chosen to eschew any further investment in gold ETFs. The Association of Mutual Funds in India says sales were a mere Rs 6 crore in August, a several-year low.

Source: Business Standard

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