Gold ETFs loose sheen in fiscal 2013

 The yellow metal was in the news for many reasons during 2012-13, including its rising import seen as the principal culprit behind India’s widening trade deficit.

However, for those who invested in Gold ETFs (Exchange Traded Funds) as a hedge against inflation or to benefit from rising gold prices, the returns were not great after all. 

Based on the last traded prices of the 13 Gold ETFs on March 28, 2013, the returns ranged from 3.25 per cent to 5.56 per cent over one year, according to data put up by the National Stock Exchange (NSE). While IDBI Gold ETF delivered 5.56 per cent, Birla Sun Life Gold ETF was a laggard at 3.25 per cent.

During the comparable period, S&P BSE benchmark Sensex delivered 10.42 per cent and NSE CNX Nifty 9.40 per cent. In a way, investors got a hint of how Gold ETFs would trend, as was evident last month when they started booking profits, resulting in assets under management (AUMs) of Gold ETFs witnessing a net outflow of about Rs 8 crore, according to industry body Association of Mutual Funds in India (AMFI).

The AUMs of Gold ETFs also slipped below the all-time high of Rs 12,000 crore scaled in January 2013 and stood at Rs 11,559 crore as of February 28, 2013. The net inflow in January was Rs 81 crore.

Also, the traded prices of some of the ETFs were close to their 52-week lows, indicating that returns in the near future could be modest. Reliance Gold ETF closed at Rs 2,711 on March 28 while its 52-week low was Rs 2,588 reached on May 16, 2012. ICICI Prudential Gold ETF ended at Rs 2,841 on March 28 and its 52-week low was Rs 2,721.45 on March 29, 2012.

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