Returns are plummeting… "It'll rise someday" retail investors rush in

Falling gold prices have recently put some gold funds into negative returns, yet individual investor money has been steadily flowing into gold funds. Investors who believe gold prices will trend upward over the long term viewed the current period as a buying opportunity at low prices. The increase in demand for safe-haven assets as domestic and foreign stock markets fluctuated also encouraged investment in gold.

On the 18th, according to FnGuide, the returns of 13 gold funds traded domestically recorded -6.24% over the past month. During the same period, they lagged far behind domestic equity funds (7.84%) and overseas equity funds (1.66%). However, the amount of money flowing into gold funds during this period reached 383.9 billion won. Considering that the total assets under management of gold funds stood at 2.3031 trillion won as of the previous day, a large amount of money has entered.

Large sums are also pouring into gold exchange-traded funds (ETFs). The 'ACE KRX Gold Spot', the largest gold spot ETF by net assets, attracted 343.6 billion won of individual investor money over the past month. It ranks third in net buying size among about 1,000 ETFs in total. 'TIGER KRX Gold Spot' also saw a net inflow of 113.6 billion won, ranking 15th. The one-month returns of these products were -13.08% and -12.51%, respectively, placing them near the bottom.

Despite poor returns, investors are accumulating gold funds because they expect gold prices to rebound soon. In fact, the securities industry has predicted that gold could reach as high as $5,000 per troy ounce next year. Recently, gold has been around $4,010 per troy ounce. Hwang Byung-jin, a researcher at NH Investment & Securities, explained, "The U.S. monetary policy easing trend is continuing the strong cycle for gold prices, and global central banks' physical gold purchases are supporting the price rise."

Yang Ji-yoon, reporter yang@hankyung.com