Investors pulled back from gold exchange traded funds (ETFs) in the month of May amid uncertainties over the US-Iran war. Net outflows stood at Rs 725.04 crore, according to data released by the Association of Mutual Funds in India (AMFI) on Wednesday, June 10.
The sharp fall comes after investors allocated a net Rs 3,040.3 crore in these funds in April. The latest outflow also breaks over a year trend on monthly inflows. Net outflows were last reported in April 2025 at Rs 5.82 crore.
Gold ETFs are exchange traded funds that track the price of the physical gold. They are a proxy and tax-efficient way of investing in the precious metal, without the need to physically store it. There are 25 schemes available in India.
The net assets under management (AUM) of gold ETFs as of May 31 stood at Rs 1.84 lakh crore. It is to be noted that the AUM also reflects the change in bullion prices.
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Why Are Investors Moving Away From Gold ETFs?
According to Harshal Dasani, Business Head at INVasset PMS, "Gold has delivered a sharp run-up over the last year, and many investors are simply booking profits after an exceptional phase of returns. When an asset class significantly outperforms, some rebalancing is natural as investors rotate capital into segments that have underperformed and now offer a more favourable risk-reward."
Flagging geopolitical risks, he added, "another factor is the recent stabilisation in global risk sentiment. A section of investors had moved into gold as a hedge against geopolitical uncertainty, central bank policy risks and currency volatility. As some of those immediate concerns moderated, short-term money has started moving out. Higher gold prices have also made fresh allocations psychologically difficult for retail investors, even though the long-term case remains intact."
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