Gold Fund is new concept on investing in gold. Gold Fund is passively managed fund suitable for a long term investors, who can invest through SIP or lumsum.
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- What is Gold Fund?
- Gold Market Outlook
- Drivers for Gold Prices
- Why to invest in Gold
- Compare Physical Holding/ ETF & Gold Fund
- 1 to 20 year Return Table for Gold Investment
- How to calculate Gold Fund NAV
- Compare Gold Fund India
The fund seeks to provide returns that closely correspond to return provided by ETF which in turn invest in physical gold. It enable to reap returns of gold in paper form without the need of a demat account.
It is a passively managed fund which would enable an investor to save for gold in a convenient manner either through lump sum investment or through systematic investment – the mutual fund way from a long term perspective. It will give investors the opportunity to participate in the bullion market in a relatively cost effective and convenient way.
Gold Outlook
At macro level, negative real interest rates, longer term inflationary concerns, currency debasement, stronger physical demands especially from China, Central bank’s accumulation of gold and thrust for portfolio diversification are key factors supporting gold prices bulls.
The long term outlook for gold looks positive. Any correction may be looked as opportunity to accumulate and long term prudent investor should continue investing in gold in a phased manner as it likely to improve risk adjusted returns for the portfolio.
Did you know that
· Gold has consistently beaten the inflation rate over the past 15 years
· Gold is seen as a sage haven in times of uncertainty
· Gold shows its best performance during periods of volatility /underperformance of stocks
· Gold is not just commodity but a currency as it protects value of money during times when currency depreciates
· Demand for Gold is strong yet supply is constrained as mining production has dropped
· Central Banks in several countries have increase their gold holdings instead of selling.
8 Reason to Invest in Gold Fund
1. Systematically invest in Gold each month through SIPs
2. Buy Gold in amount as small as 1000 without having to worry about purity
3. No demat account to required
4. Buy/ Sell unit of Gold Fund on any business day at NAV based price
5. No storage charges, no making charges, no safe keeping worries
6. Hedge against Inflation
7. Less volatile
8. Lesser charges
Parameter | Physical Holding | Gold ETF | Gold Fund | |
1 | Method of Holding | Physical (Bar/coins) | Dematerialized (Electronic Form)/ Physical unit of the scheme | Mutual Fund Unit, No demat account required |
2 | Security of Gold | Investor is responsible | Fund take a responsibility | Fund take a responsibility |
3 | Risk of Theft | Yes, Possible | Not possible | Not possible |
4 | Convenience in Buying / Selling | Less convenient, as gold needs to moved physically | More convenient, as held in demat account | Can invest regularly through sips |
5 | Making Charges | Making charges incurred | No charges are required | No charges are required |
6 | Resale | Conditional and uneconomical | At secondary market price | At NAV base price |
7 | Wealth Tax | Yes | No | No |
8 | Capital Gain Tax | Only after 3 year | After 1 year | After 1 year |
Is there any requirement for opening a demat account for purchase and sale of units of gold fund?
It is not necessary to have a demat account for purchase and sale of gold fund units. The investor can directly purchase and sale the units through physical application or online mode.
What will be the benchmark of Gold Fund?
The scheme’s performance will be benchmarked against the price of physical gold
Gold Investment Performance
Here’s an illustration of how a SIP of 1000 per month in physical gold would have performed over different time periods
1 Year | 3 Years | 5 Years | 10 Years | 20 Years | |
SIP Start Date | 31 Jan 11 | 30 Jan 09 | 31 Jan 07 | 31 Jan 02 | 31 Jan 92 |
No of Installments | 12 | 36 | 60 | 120 | 240 |
Amount Invested | 12,000 | 36,000 | 60,000 | 120,000 | 240,000 |
Investment value 31 Jan 12 | 14,286 | 54,773 | 117,813 | 393,040 | 1,259,493 |
Investment Returns p.a. | 36.59% | 29.12% | 27.30% | 22.42% | 14.56% |
The above illustration for general information , its past performance of gold
Computation of Gold Fund NAV
The NAV of the units of the scheme will be computed by dividing the net assets of the Scheme will be computed by dividing the net assets of the Scheme by number of units outstanding on the valuation date.
Compare Gold Fund India
Scheme name | NAV as on 28 May 12 | Exit Load | Fund Expenses Fund+ ETF |
Axis Gold Fund | 10.88 | 1% | 1.50% |
Birla Gold | 10.19 | 2% | |
ICICI reg. Gold Saving Fund | 10.55 | 2% | 1.50% |
HDFC Gold Fund | 10.30 | 6 month 2 % 1 year 1 % | 1.75% |
Kotak Gold Fund | 13.42 | 6 month 2 % 1 year 1 % | 1.50% |
Reliance Gold Saving Fund | 13.47 | 2% | 1.50% |
SBI Gold Fund | 10.13 | 1% | Actual |
Quantum Gold Fund | 12.97 | 1.50% | 1.25% |
exit after 1 year from date of allotment – nil (Exit load)
Current returns for Gold Funds
Reliance Gold Saving , SBI Gold & HDFC Gold Fund is good fund for investment
| Fund Name | Launch Dt | AUM | NAV | 1 M % | 3 M % | 6 M % | 1 Yr % |
|---|---|---|---|---|---|---|---|
| Reliance Gold Saving Fund | 2299 | 14.94 | 1.7 | 7.6 | 11.4 | 10.2 | |
| SBI Gold Fund | 787 | 11.08 | 0.8 | 5.6 | 10.2 | 9.8 | |
| HDFC Gold Fund | 297 | 11.44 | 1.6 | 7.4 | 11.1 | 9.4 | |
| Axis Gold Fund | 100 | 11.77 | .9 | 5.6 | 9.7 | 9.5 | |
| Kotak Gold Fund | 525 | 14.60 | .8 | 5.2 | 9.7 | 8.1 | |
| ICICI Gold saving Fund | 88 | 11.56 | .2 | 6.3 | 10.2 | 9 | |
| Religare Gold Fund | 23 | 10.80 | .6 | 5.6 | 10.3 |
**returns as on 9 Nov 12
** source Moneycontrol
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