The recently-launched DSPML World Gold Fund has certainly treated its investors well. Its returns have added to the cheer of the festival season. The fund, which was on offer from July 25 to August 23, 2007, has yielded an over 36 per cent return (as on October 30).
The fund offered its units at Rs 10 along with an entry load of 2.25 per cent. The fund listed on September 18 with a NAV of 11.4971, a gain of 12.44 per cent. Had you invested on the last day of the NFO, you would have made a neat 24 per cent in a month.
At first blush, the returns of the other four gold funds in the country pale in comparison. But it must be noted that the other funds are exchange traded funds (ETFs); a stark difference from DSPML World Gold Fund which actually buys stocks of gold mining and producing companies. It does so by investing predominantly in units of Merrill Lynch International Investment Funds - World Gold Fund (MLIIF -WGF).
According to September portfolio of the fund, the top three companies where the fund invested are Australia-based Newcrest Mining, Canada-based Barrick Gold and China's Zinjin Mining.
The gold ETFs in India are all less than a year old. Gold Benchmark Exchange Traded Fund, the oldest fund in this category, was launched in February 2007 and its returns since launch at 7.6 per cent are way behind DSPML World Gold Fund. Kotak Gold Exchange Traded Fund, launched in July this year, has posted the highest returns since launch of 15.6 per cent. UTI Gold Exchange Traded Fund's returns since launch stands at around 7 per cent. The latest entrant is Reliance Gold Exchange Traded Fund, which has just concluded its NFO period. Taking the four ETFs as a category as a whole, the returns were 13 per cent during the August 23 - October 30 period.
Naturally, the performance of these funds will rise or sink based on the movement of gold prices in the international markets. Since gold is trading at an all-time high over the last three decades, it has been reflected in the performance of the gold funds.