New Delhi:
The effect of the rise in gold prices is now visible on investment methods as well. People investing in the stock market are also increasingly turning to Gold Exchange Traded Funds (Gold ETFs). In the last 3 years, investor interest in gold ETFs has increased so much that it has left even large-cap equity funds behind. According to a report, the number of gold ETF folios has increased 2.6 times since September 2023. However, experts are also cautioning investors about this increasing trend.
According to the report of Omniscience Capital, the folio of gold ETF has increased by 2.6 times from September 2023 till now. At the same time, the number of folios of large-cap equity funds has increased only 1.3 times during this period. This shows that the inclination of investors towards gold has increased more rapidly than the big funds of the stock market. According to the report, the total asset under management (AUM) of Gold ETF has increased to about Rs 1.9 lakh crore. This is about 47 per cent of the approximately Rs 4 lakh crore AUM of large-cap equity funds.
Are you also a victim of ‘FOMO’?
According to Ashwini Shami, President and Chief Portfolio Manager, Omniscience Capital, the rapid movement of investors towards gold ETFs reflects Fear of Missing Out (FOMO) i.e. the fear of missing the opportunity to get good returns. Seeing the continuous rise in gold prices, investors are investing money in it. He believes that this inclination of investors towards any one asset is not good for a balanced investment strategy.
How much gold should be there in the portfolio?
According to experts, it is generally considered better to keep the share of gold in the investment portfolio between 5 to 10 percent. At the same time, their total stake including private equity, real estate and other alternative investment instruments can be between 10 to 20 percent. Ashwini Shami has advised investors to review their portfolio and not have excessive expectations about future returns from gold.
Will gold continue to shine in future?
According to the report, purchases of gold by central banks are supporting its prices. However, it is not necessary for gold prices to remain rising only on the basis of purchases by central banks. If investors move towards options like fixed income and debt for better returns, then the demand for gold may be affected. Therefore, experts advise to avoid investing excessively in gold ETFs just by looking at the recent rise.
What is gold etf
Let us tell you that Gold Exchange Traded Fund i.e. Gold ETF is such an investment option, in which you can invest in gold without buying physical gold. This is a fund listed in the stock market, which you can buy and sell like shares. In this, your money is directly linked to the price of gold. If the price of gold increases, the value of your investment also increases and if it falls, it decreases.
Benefits of Gold ETF
- 100% guarantee of purity
- no worries about security
- Freedom from ‘making charge’
- start with small amount
- sell easily
- Uniform price across the country
Source: ndtv.in
