Withdrawal in Gold ETF after 12 months due to profit booking, investors withdrew Rs 396 crore in April

Due to profit booking, there has been a net withdrawal of Rs 396 crore from Gold ETF (Exchange Traded Fund) in April after 12 months. This is the first withdrawal from gold ETF after March 2023. Earlier during March 2024, there was a net investment of Rs 373 crore in Gold ETF. There was a withdrawal of Rs 226 crore from Gold ETF in March 2023.

According to data from the Association of Mutual Funds in India (MFFI), despite net outflows, the asset under management (AUM) of gold funds increased to Rs 32,789 crore in April from Rs 31,224 crore at the end of March this year. According to the data, there was a net investment of Rs 2,920 crore in gold ETFs during the entire calendar year 2023, which was significantly higher than Rs 459 crore in 2022.

Last month, the number of folios (accounts) of Gold ETF also increased by more than one lakh. The number of folios investing in Gold ETFs at the end of April was 51.84 lakh which was 50.61 lakh at the end of March.

Melvin Santarita, analyst at Morningstar Investment Research India, says that gold has performed very well in terms of the Indian rupee during the last year. However, it has been lower than equities. In view of this, investment in gold ETFs has been somewhat weak relative to equities. Investors have opted to book some profits in this investment category. The result is that despite the increase in prices, net outflows have been recorded. Vishal Jain, CEO, Zerodha Fund House, says that investing in gold ETFs offers benefits like liquidity, cost-effectiveness, and security.

From December 2019 to the present, the AUM of the Gold ETF has increased by nearly six times. In December 2019, its AUM was Rs 5,528 crore, and by April 2024, it had grown to Rs 31,224 crore. December 2023 saw an AUM of Rs 25,959 crore for gold ETFs.

Six of the top 10 companies listed on the BSE saw a decline in market capitalization of Rs 1.73 lakh crore as a result of the drop in the domestic stock markets last week. By Rs 60,678.26 crore, HDFC Bank's capitalization has dropped the most during this time. In addition, the capitalization of SBI, ITC, ICICI Bank, Reliance Industries, LIC, and SBI has all dropped. On the other hand, the capitalization of HUL, TCS, Bharti Airtel, and Infosys has increased.