Gold exchange traded funds have lost favour among investors as mutual fund managers pulled out nearly Rs 1,500 crore (Rs 15 billion) from these products in 2014-15 because of poor returns offered by such schemes.
This was the second consecutive yearly outflow from such funds.
According to the latest data available with Association of Mutual Funds in India, gold ETFs witnessed an outflow of Rs 1,475 crore (Rs 14.75 billion) last fiscal as compared to a withdrawal of Rs 2,293 crore (Rs 22.93 billion) by MF managers in 2013-14.
In 2012-13, gold ETFs had seen inflow of Rs 1,414 crore (Rs 14.14 billion).
The outflow led to assets under management of gold funds plunging by more than 23 per cent during the period.
Market experts attributed the outflows in past fiscal to poor returns offered by gold schemes and regulatory restrictions such as 80:20 scheme on import of the metal.
However, the Reserve Bank had scrapped the controversial 80:20 scheme in November last year.
Under the 80:20 programme, which was put in place in August 2013 to put a tight leash on gold inflows, at least 20 per cent of the imported gold had to be exported before bringing in new lots.
"Demand for gold ETFs has been steadily falling for the past two years. Gold ETFs have seen outflow as gold prices are correcting and equities have given good returns to investors," Quantum AMC Fund Manager (Commodities) Chirag Mehta said.
He further said that rate of outflow has slowdown in the past few months and recent measures taken by Reserve Bank will help in attracting investors.
Currently, the mutual fund sector has 14 gold-based schemes with a total asset base of Rs 6,655 crore (Rs 66.55 billion).
The asset base stood at about Rs 8,676 crore (Rs 86.76 billion) at the end of March 2014.
