Gold saving funds witness Rs 864-crore inflow in April

Gold saving funds and gold exchange traded funds (ETFs) witnessed net inflows of Rs 864 crore in April amid uncertain economic environment in the wake of the second wave of COVID-19.

Gold saving funds and gold ETFs have seen net inflow to the tune of Rs 184 crore and Rs 680 crore, respectively in the month of April, according to data provided by Morningstar India.

This comes following net inflow of over Rs 3,200 crore in gold funds in the entire 2020-21, while the same for gold ETFs was more than Rs 6,900 crore as per the data.

"The sharp and intense surge in coronavirus cases this year has fanned hopes that, as an asset class, gold may continue to perform well in the current environment. This has kept investors interest intact in the asset class," Himanshu Srivastava, Associate Director, Morningstar India.

Quantum Mutual Fund's Mehta said that the inability of investors to invest in or liquidate physical gold due to the COVID-19 social restrictions, though painful in the short term, turned out to be a blessing in disguise.

It seems like many investors were finally compelled to acknowledge the drawbacks of physical gold and give up their inefficient preference for holding it, he said.

Further, they chose to optimise their gold holdings by switching to the more efficient gold ETFs or gold saving funds which let them sit in the safety and comfort of their home and enable them to buy and sell gold as and when they want, he added.

Moreover, these instruments have delivered 13-14 per cent annualised CAGR return in the last three years, more than 8 per cent in past five years.

Morningstar India's Srivastava said that the investment environment over the last few years have been extremely conducive for gold as an asset class.

Gold saving fund is a mutual fund that invest in gold ETFs and such fund do not directly invest in physical but indirectly through gold ETFs. An investor can invest in gold saving fund through systematic investment plan (SIP).