Wednesday, February 21, 2007

Gold Exchange Traded Funds

PersonalFn guys have a detailed review of Gold ETF which has been launched by Benchmark MF and being launched by UTI MF in March,2007 See their detailed review here

Some facts extracted from the review about gold:

Gold as an investment avenue has in some sense failed to deliver over the long-term. In fact, over the last 17 years, gold has appreciated by only 8.6% CAGR - Compounded Annualised Growth Rate. This compares not so well with other investment avenues like the stock markets (the return from the BSE Sensex over the same period is about two times more than what gold has delivered).

Gold is considered to be a safeguard against inflation. The reason for this is that the factors that affect the price of gold are usually different from factors that impact prices of financial assets like stock markets and bonds. So in times when financial assets are in turmoil due to inflation or any other development, the price of gold will tend to move in the other direction and money flows into 'safe' assets like gold. In a portfolio, gold brings in much needed stability over the long-term.

Given the relatively high entry load(1.5%) charged by the fund house during the NFO period, investors, who intend investing in gold, should avoid Gold BeES during the NFO period. They can consider investing in the ETF after the NFO period when it gets listed in the stock exchange (broker charges 0.5%).
Investing Gyan
Reviews, Tips, Calculators with an Indian perspective.
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