The launch of Religare Mutual Fund’s Gold exchange Traded Fund (ETF) has expanded the segment’s universe. Till now, there were six gold ETFs - the oldest being Gold Benchmark ETF, which was launched way back in February 2007.
The Religare Gold ETF fund will invest up to 100 per cent in physical gold in the domestic markets while it would also invest up to 10 per cent in debt or money market instruments.
The performance of the scheme would be benchmarked against the price of gold.
For investors, Saurabh Nanavati, Chief Executive Officer, Religare Mutual Fund, lays out the reasoning behind the launch of the ETF: “Investors keep asking whether this is the right time to invest in gold. From my perspective, gold is a necessary allocation for everybody’s portfolio to the tune of 5-10 per cent. Gold is a hedge against inflation and a falling US dollar. Emerging markets like India are facing inflationary issues due to ample liquidity created by global central banks. As regards the US dollar, over a longer period with India and China GDP growth being in excess of 6 per cent plus and US growth not expected to cross 2 per cent in the near future, the dollar is bound to depreciate fairly sharply over the next five years against emerging market currencies. Gold will therefore, act as an insurance to retail investor portfolios”.
The fund would be managed by commerce graduate and an MBA in finance, Gautam Kaul. He has more than eight years of experience in fixed income markets. Prior to joining Religare AMC, he was working in Sahara India AMC (2005- 2006) and Mata Securities (India).
The New Fund Offer (NFO) opens on January 28, 2010 while it closes on February 23, 2010.
The minimum application amount during NFO period for retail investors is Rs 5,000, while for large investors, it is Rs 15 lakh per application.
There is no exit load.
Other Gold ETFs in the market:
1. Gold Benchmark ETF
2. Kotak Gold ETF
3. Quantum Gold
4. Reliance Gold ETF
5. SBI Gold ETS
6. UTI Gold ETF.