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IDBI Gold ETF


With the price of gold up by around 30 per cent this year, investments in gold through mutual funds has become a silent trend. It has become simple and easy for investors to get exposure to gold through fund SIPs.

There are many gold funds available already, with IDBI Mutual Fund joining in now. IDBI has become the 12th AMC to launch a Gold ETF – an open-ended gold exchange traded scheme.

Investment Strategy
It will invest in physical gold with the objective of replicating the performance of gold in domestic prices. The ETF will adopt a passive investment strategy and try to minimize the tracking error between the fund and the underlying asset. Besides these investments in physical gold, the scheme may invest up to 5 per cent in debt and money market instruments. The physical gold will have the purity of 99.5 per cent.

Charges
The fund’s annual charges will be 1.5 per cent and it will include fund management fees and other charges.

The transaction charges (fees to distributor/agent) will be Rs.150 for first time investors and Rs.100 for existing investors. However, there will be no transaction charge for investors who choose to invest directly with the fund house.

Fund Manager
Mr. Gautam Kaul will manage this fund. He is an MBA with over 10 years experience in debt markets including 6 years in the mutual fund industry. He has worked as a dealer & fixed income fund manager in Religare Mutual Fund, dealer - fixed Income in Sahara Mutual Fund and government securities & corporate bond desk dealer in Mata Securities Pvt. Ltd. He also manages IDBI Nifty Index Fund, Liquid Fund, Ultra Short-Term Fund, Nifty Junior Index Fund, Short-Term Bond Fund, FMP and MIP.

Fund House
IDBI Mutual Fund launched its first scheme in May 2010 and now manages 7 funds, including this one. Its assets under management (AUM), as on September 30, 2011, stand at Rs 4926 crores.

Similar Funds
Funds  Launch Date
Goldman Sachs Gold ETF Feb-07
UTI Gold ETF Mar-07
Kotak Gold ETF Jul-07
Reliance Gold ETF Nov-07
Quantum Gold Feb-08
SBI Gold ETS Apr-09
Religare Gold ETF Feb-10
HDFC Gold ETF Jul-10
ICICI Prudential Gold ETF Jul-10
Axis Gold ETF Nov-10
Birla Sun Life Gold ETF May-11
Returns of these funds are almost similar.

Our View
If you want to invest in gold, you may invest 5 to 10 per cent of your overall portfolio in IDBI Gold ETF. However, one should keep in mind when to get out of such a fund. Hence, ensuring a stop loss trigger in such an investment is very important.

Basic Details
NFO Opens: October 19, 2011
NFO Closes: November 02, 2011
NFO Price: Rs.100 plus premium
Options: None
Minimum Application Amount: Rs. 10,000/- and in multiples of Re.1 thereafter Exit Load: NIL
Benchmark: Domestic Price of physical Gold
Fund Manager: Mr. Gautam Kaul