Economic downturn because of the coronavirus pandemic and weakness in the dollar encouraged investors to infuse a massive Rs 6,657 crore into gold exchange-traded funds in 2020.

In comparison, a net inflow of just Rs 16 crore was seen in entire 2019. The inflow came after witnessing a net pullout from safe-haven assets for six consecutive years, mainly on fears of a global slowdown and volatility in equity and debt markets.

Assets under management of gold funds surged over two-fold to Rs 14,174 crore at the end of December 2020 from Rs 5,768 crore a year ago, data from the Association of Mutual Funds in India showed.

Gold with its safe-haven appeal emerged as one of the best performing asset classes and a preferred investment destination among investors in 2020 as investors put in a net sum of Rs 6,657 crore in 14 gold-linked ETFs.

Barring March and November, such instruments had seen a net inflow in 2020.

Himanshu Srivastava, associate director-manager research, Morningstar India, said investors were attracted towards the instrument because of multiple factors such as economic downturn caused due to the pandemic, weakness in the dollar and tension between the US and China.

According to Nishant Kohli, founder and business head-wealth at Mudra Portfolio Managers, uncertainties in the market led to too much increase in gold’s return which led to attracting investments even from retail participants.