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    Home»Commodities»Gold remains under-allocated despite price surge, ETF demand rising, says Nippon India fund manager
    Commodities

    Gold remains under-allocated despite price surge, ETF demand rising, says Nippon India fund manager

    March 21, 20252 Mins Read


    Nippon India Mutual Fund sees a significant under-allocation to gold in investment portfolios, according to its Head-Commodities and Fund Manager Vikram Dhawan. This observation comes amidst soaring gold prices, which have led to a noticeable decline in retail physical purchases in major markets like India and China.

    Despite this drop in traditional jewellery demand, Dhawan highlighted a shifting dynamic in the gold market, with investment demand, particularly through exchange-traded funds (ETFs), gaining momentum.

    “Of the total assets under management in mutual funds, gold holdings are just 1%,” Dhawan said.

    Dhawan stated that gold rallies are driven by different factors at different times. The current surge, he explained, is distinct, moving away from previous reliance on ETF flows and COVID-related hedging. Instead, it’s increasingly influenced by central bank buying and, notably, a resurgence in investment demand, particularly through ETFs.

    “Indian investors are benefiting from the virtues of gold ETFs, the liquidity and being very well regulated, and being fully backed by physical gold,” Dhawan said.

    Also Read: Microfinance, personal loan hurdles driving more borrowers to gold: Muthoot MD

    He also stated the convenience of digital transactions, which further enhances the appeal of ETFs. While physical gold demand still dominates in India and China, ETF flows are picking up, and Dhawan sees potential for further growth.

    Despite gold’s recent strong performance, Dhawan emphasised that it remains an under-allocated asset class in global portfolios. He suggested that increased currency volatility, particularly stemming from US policies, and uncertainty in risk assets could drive further interest and allocation to gold, potentially pushing it beyond its historically low portfolio percentages.

    Also Read: Senco Gold eyes 20% topline growth in FY25 with 20 new stores

    For the entire interview, watch the accompanying video

    Catch all the latest updates from the stock market here

    (Edited by : Unnikrishnan)



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