Gold ETFs saw gross trading of only Rs. 34 crore on Akshaya Tritiya.
The auspicious occasion of Akshaya Tritiya failed to lure investors towards gold. Lackluster performance of gold was one of the main reasons for investors to stay away from the yellow metal, which was evident by a fall in the trading volumes of Gold ETF.
The demand for gold generally shoots up during Akshaya Tritiya which is considered to be an auspicious day for buying the yellow metal. However, the category saw a gross trading of only Rs.34 crore on Akshaya Tritiya.
NSE recorded trading volume to the tune of Rs. 31 crore as against Rs. 35 crore on Askshya Tritiya last year. BSE saw trading worth Rs. 3 crore compared to Rs 18 crore last year. In 2013, the trading volume on NSE and BSE were Rs.691 crore and Rs.615 crore respectively.
Both NSE and BSE had extended market timings on Akshaya Tritiya for trading in Gold ETFs till 7pm.
Chirag Mehta, Fund Manager – Commodity, Quantum MF attributed this to underperformance of gold compared to other assets classes like equity. “Investors tend to invest in hot asset classes. Over the last two years, they have shunned gold and increased their exposure to equity funds since the latter has outperformed other asset classes.”
Mehta is of the view that investors should invest a small portion (10-15%) in gold. “Going by the fundaments, the downside risk in gold is limited. From a long term perspective, it is the right time for investors to take a small exposure in gold.”
A senior fund manager from a bank sponsored AMC seconds the view and said, “The appetite for gold usually increases during uncertain market condition and in the recent past the country has shown some signs of recovery.”
Gold ETF folios dipped by 23,633 from 4.89 lakh to 4.65 lakh last fiscal. Gold funds (including gold ETFs) have been the worst performing category, delivering negative 8% return over a one year period, shows Value Research data. Gold ETFs manage Rs. 6,655 crore as on March 2015.
The largest pie in the gold ETF market is held by Goldman Sachs which manages Rs.1,833 crore followed by Reliance (Rs. 1,444 crore), SBI (Rs. 984 crore), HDFC (Rs. 607 crore), Kotak (Rs. 526 crore), UTI (Rs 479 crore). Many AMCs have launched gold fund of funds, which invest in gold ETFs for those investors who do not possess demat accounts.
