Gold ETFs likely to see higher inflows: Crisil

Globally there has been a clear shift in the demand pattern of the yellow metal with the gold EFTs (exchange-traded funds or products) demand,yet another form of retail investment demand,making an all time high of 617 tonnes in 2009 and for the first three quarters of 2010 standing at 334 tonnes.

Domestic Gold ETFs which are considered as the simplest means for investors to take exposure to gold have been in existence since nearly four years now. Given that on average this investment choice has consistently outperformed the equity market it may benefit the retail investors to diversify their portfolio by including this investment avenue.

In the last three years gold has outperformed many asset classes including the equities market given that it gave an average returns of 25 per cent against the average 14 per cent return given by equities market during the period.

Further in 2010,gold has given a return of 23 per cent,well above the 18 per centreturn from the equity markets.

Gold is regarded as a monetary asset since the precious metals physical consumption is restricted in jewellery making and to an extent some industrial applications.

Moreover,it not only provides a hedge against economic instability but also against the inflation. Hence,investors should consider including this in their portfolio to make it efficient against the decline in the values of other asset classes.