New Delhi: Increased risk and uncertainty caused by the Covid-19 The pandemic has provoked investors to rush to gold as a safe haven as they have injected more than four times more than 6,900 million in gold exchange traded funds (ETFs) in 2020-21, more than four times the previous fiscal.
This is also the second consecutive year of inflow. For that matter, gold ETFs have witnessed outflows since 2013-14, data from the Association of Mutual Funds in India (Amfi) has shown.
Harshad Chetanwala, co-founder of Mywealthgrowth.com, said the inflow of gold was unlikely to have a similar increase in current fiscal. According to the Amfi data, investors invested a net amount of 6 919 million in 14 gold-linked ETFs in the just concluded financial year, much higher than the 1 614 million invested in 2019-20.
The asset for safe havens was net outflow of 412 million in 2018-19, 835 million in 2017-18, 775 million in 2016-’17, 903 million in 2015-’16, 1 775 million in 2014-’15 and a amount of 2 293 million in 2013-’14. However, in 2012-13, the segment saw an infusion of Rs 1414 million.
Over the past few years, retail investors have poured more money into equities compared to gold ETFs, mainly due to decent returns. Chirag Mehta, Senior Fund Manager (Alternative Investment), said: ‘The increased risk and uncertainty Covid-19 risked assets such as equities in 2020 and investors rushed to the safety and stability of gold, just as in previous crises. ”
He added that investors tend to start appreciating the risk-reducing, return-increasing role of gold in the portfolio and after a crisis, and that 2020 was no exception.
In addition, investors’ inability to invest in physical gold thanks to the pandemic-induced closures, and restrictions during the year also led to extra flows to gold ETFs, he added. ‘The flow in Gold ETF during the year 2020-’21 was driven by the uncertainty during the Covid-19 pandemic. “Gold prices usually rise during such global events and many investors invested in gold last year when gold prices started to rise,” said Chetanwala.
Market Pulse chief executive Arshad Fahoum said the macroeconomic environment, amid low interest rates on debt and fixed deposits, could also move people to gold as a safe haven investment.
Source: Telangana Today