As Dhanteras 2024 approaches, the question on many investors’ minds is: Will Gold ETFs (Exchange Traded Funds) continue to glitter? Inflows into Gold ETFs have surged by nearly 88% since the beginning of the year, reflecting growing investor interest in these funds. Factors such as enhanced liquidity, increased transparency, and alignment with global gold prices have made Gold ETFs increasingly attractive. India, being the second-largest gold consumer after China, is witnessing a significant shift in gold investment preferences.
In the last five years, Gold ETFs have experienced a remarkable seven-fold increase in Assets under Management (AUM), rising from ₹5,613.22 crore in September 2019 to ₹39,823.50 crore in September 2024. This growth offers exciting insights as we head into the Dhanteras season.
As of September 2024, inflows into Gold ETFs stood at ₹1,232.99 crore, marking an impressive jump compared to January 2024. Retail investors are particularly drawn to Gold ETFs due to their liquidity, transparency, regulatory safeguards, and the fact that their prices are aligned with global bullion markets. With over 17 Gold ETF schemes available, investors have a wide range of options to choose from.
The appeal of Gold ETFs as a “safe-haven” investment has also been boosted by ongoing geopolitical tensions and a recent rate cut by the U.S. Federal Reserve. Unlike physical gold, Gold ETFs provide investors with the assurance of purity, security from theft, and the added benefits of cost efficiency and ease of trading.
In terms of returns, Gold ETFs are delivering solid performances. The average one-year return for gold hovers around 29.12%, while three-year and five-year returns stand at 16.93% and 13.59%, respectively.
As we enter the festive season, the key question remains: Will traditional gold demand rise, or will savvy investors capitalize on price dips in Gold ETFs to benefit from temporary corrections? Either way, the gold rush is well underway.
Source: The Financial Express
Date: Oct 17, 2024
Disclaimer: This blog has been written exclusively for educational purposes.
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