₹10L to ₹1cr: This gold fund delivered 950% since launch
What's the story
Nippon India ETF Gold BeES, India's oldest gold exchange-traded fund (ETF), has given a whopping 950% return since its launch in July 2007. An investment of ₹10 lakh made 18 years ago is now worth over ₹1 crore. The stellar performance comes as gold prices hit record highs globally and in India, amid inflationary pressures, geopolitical tensions, and de-dollarization trends.
Market trends
Gold hits new highs globally
Gold has hit new highs, crossing ₹1.22 lakh per 10gm in India's futures market and trading above $4,000 per ounce globally. This trend is backed by American billionaire Ray Dalio's advice to allocate about 15% of an investor's portfolio to gold as an "excellent diversifier." He stressed that equities and other traditional investments are heavily credit-dependent, making gold a strong hedge against potential downturns.
Fund performance
Gold BeES has grown at a healthy CAGR of 13.5%
Since its inception, Gold BeES has grown at a healthy CAGR of 13.5% over 18 years. The fund now manages nearly ₹24,000 crore of investor money and is up over 56% in the last year alone. Its stellar performance is reminiscent of past periods such as the dot-com bust, the 2008 financial crisis, and the COVID-19 shock in 2020, when investors flocked to safe-haven assets like gold.
Investor behavior
Record inflows into Indian gold ETFs
Indian gold ETFs have seen record inflows of $2.18 billion this year, surpassing all previous annual records. This comes as local gold prices have surged 60% year-to-date after a 21% gain last year. The recent price surge is attributed to rising de-dollarization trends, with countries such as China and Russia increasing their gold reserves as part of their central bank reserves.
Market dynamics
Geopolitical uncertainty and central bank buying support gold's rise
Gold's strength is further bolstered by geopolitical uncertainty, continued central bank buying, expectations of further Federal Reserve rate cuts, and questions about Fed independence. These factors reinforce gold's status as a safe-haven asset and core reserve diversifier. Despite the US government shutdown delaying key economic data, traders are pricing in 25-basis-point rate cuts in October and December.