Equity-oriented mutual funds witnessed net outflows for the second month in a row, the quantum of which was significantly higher in August than in July. Similar was the case with debt-oriented funds. After recording net inflows for four months in a row, debt-oriented schemes witnessed a marginal net outflow of Rs 3,907.5 crore in August, which was largely on the back of significant net outflow from the Overnight Fund and Liquid Fund categories.
However, the Gold ETF category continued to receive net inflows in the month of August too. That made it an uninterrupted net inflow for five months in a row. Gold prices came off their all-time high in August, after witnessing almost an uninterrupted rally this year. This probably provided a good entry point for investors to invest in the yellow metal.
Consequently, in August, the Gold ETF category received a net inflow of Rs 907.9 crore, marginally lower than the net inflow of Rs 921.2 crore recorded in July. This year so far, the category has received a net inflow of Rs 5,359.7 crore.
“With all major economies staring at recession due to the spread of coronavirus pandemic, gold, with its safe-haven appeal, has emerged as one of the best performing asset class and a preferred investment destination among investors,” said Himanshu Srivastava, Associate Director – Manager Research, Morningstar India, commenting on the AMFI data for August 2020.
Moreover, as the surge in coronavirus cases has cast a doubt on the swift recovery hopes, investors continue to hedge their exposure to riskier assets by investing a portion of their assets in gold, as it is seen as a safe haven in times of uncertainty.
“Considering the threat posed by the coronavirus pandemic to the global economy and the markets, this segment may continue gaining traction from investors,” he added.
Gold functions as a strategic asset in an investor’s portfolio, given its ability to act as an effective diversifier, and alleviate losses during tough market conditions and economic downturns. This is where it draws a safe-haven appeal, which has been on full display since 2019.