Synopsis
- Gold ETFs received Rs 2,080 crore in inflows in June, driven by geopolitical uncertainties, inflation concerns, and anticipated interest rate cuts.
- Experts suggest a balanced portfolio with limited gold exposure, favoring equity mutual funds for better returns.
- Gold serves as a safe-haven asset, but it’s considered less dependable for long-term wealth creation compared to equity.
Gold ETFs, a popular investment option for those seeking a safe-haven asset, have experienced a significant surge in inflows in June, reaching Rs 2,080 crore. This surge is attributed to geopolitical uncertainties, inflation concerns, and anticipated interest rate cuts. However, experts advise caution and recommend a balanced portfolio with limited gold exposure, favoring equity mutual funds for better returns.
Why the surge in gold ETFs?
According to experts, the surge in gold ETFs can be attributed to a combination of global economic and geopolitical factors, including:
* Global geopolitical uncertainty, such as the India-US Trade Deal, conflicts in the Middle East, and Trump tariffs
* Inflation concerns, which keep gold appealing as a hedge
* Falling interest rates, which make gold more attractive
Expert advice on investment strategy
Shenoy, Director & Head – Product & Research, Anand Rathi Wealth Limited, recommends:
* Investing in a balanced portfolio with an asset allocation of 80:20 in equity to debt
* Maintaining limited gold exposure, not exceeding 5-10% of the portfolio
* Considering SIPs in equity mutual funds for better returns
* Avoiding Gold through SIPs, as they would generate a better return investing in equity mutual funds
Comparison with other hedging options
Experts highlight that multi-asset and dynamic asset allocation funds cannot be directly compared with Gold ETFs, as they invest across multiple categories and lack transparency. Shenoy advises:
* Investing in pure-play equity and debt funds for long-term stability and consistent wealth creation
* Avoiding hybrid funds due to limited visibility and control over the actual allocation
Key statistics
| Asset Under Management (AUM) | Value (Rs crore) |
|---|---|
| June 30, 2025 | 64,777 crore |
| May 2025 | 62,452 crore |
| June 2024 | 34,355 crore |
Conclusion
Gold ETFs have experienced a significant surge in inflows in June, driven by geopolitical uncertainties, inflation concerns, and anticipated interest rate cuts. Experts advise caution and recommend a balanced portfolio with limited gold exposure, favoring equity mutual funds for better returns. As gold serves as a safe-haven asset, but it’s considered less dependable for long-term wealth creation compared to equity, investors should consider the pros and cons of investing in gold ETFs and other hedging options.
“Gold is a defence asset like debt. Hence, the total allocation to gold and debt in your portfolio should not exceed 20%,”
— Shenoy, Director & Head – Product & Research, Anand Rathi Wealth Limited
This article was written with reference to the original article from The Economic Times.
Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times.
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