Invested in Gold - Book Profits Now

Gold is glittering, and making the most of this gold rally are gold exchange traded funds (ETF), with their asset size jumping four times to Rs 900 crore since 2007. Experts suggest it is time to books profits. CNBC-TV18’s Priyal Guliani reports.

After seeing a lacklustre start, gold ETFs are riding high; between May–July 2009, net inflows in gold ETFs has jumped to Rs 180 crore–the highest that the category has witnessed since its inception in 2007. The asset size too has grown to Rs 900 crore.

Speaking on the reasons for this, Lakshmi Iyer, Head–Fixed Income and Products, Kotak MF, said “People have realized that ETFs as an option to own gold is a winner and also increase in the risk appetite has led to enhanced allocation for hedging."

Gold ETFs have been top performers across all categories since 2008. In the last one-year, the funds have given 35.87% returns. For the two year period, the average category returns have been 30.29%.

However, between March 09 and August 09, gold ETFs have not been able to match the equity returns witnessed during the same period.

Iyer, commenting on the way ahead, said, “Broadly, long-term gold remains bullish. However, in the nearer term there could be profit taking which would bring down levels below USD 1000 an ounce."

However, experts have a word of caution. They say investors should be wary to enter at these high levels equity and gold cannot rise together for a long period. But for those who already have 15–20% of gold in their portfolio, some say this could perhaps be a good time to book pofits.