I have two queries:
i) Please suggest the top three performing funds, which invest directly in gold or gold mining companies?
ii) If I am starting an SIP this month, which is the right time frame to look at: 6 months or 1 year? The reason I am asking this is because of the volatile market we have had since the start of 2008?
At present there are two types of gold related funds available in India. The gold exchange traded funds (Gold ETF) invest in gold. There are currently five such funds — Reliance Gold ETF, Gold Benchmark ETF, Quantum Gold, UTI Gold ETF and Kotak Gold ETF. All of these have posted almost identical returns. UTI Gold ETF Fund and Benchmark ETF Fund are the ones with the longest tenure and their 1-year return is at around 48 per cent*.
Besides these, you have funds that invest in stocks of gold mining, refining and marketing companies abroad. But the funds in this category have not yet completed a year. The DSPML World Gold Fund delivered 42.31 per cent* since launch in August 2007 while the AIG World Gold Fund is a very new player launched in May 2008. All the above funds are relatively new so it is difficult to analyse them on the basis of past performance. You can pick your investment tenure depending on your need for money and your savings goals. But generally, it is advisable to invest for the long term, which is at least 3-5 years.
*All returns as on July 9, 2008.