I have invested Rs 30,000 in DSPBR World Gold fund in 2008 when the NAV was Rs 14.28 and the current NAV is about Rs 20. Should I exit the fund and invest this amount through STP in some gold fund or should I continue with this fund? I do not need the money and would prefer to continue investing in gold.
— Saurabh Agarwal
This thematic international fund invests in companies in the business of extracting, processing and marketing of gold. Investment may also take place in companies engaged in the business of mining other metals / precious stones. These funds are more volatile than the gold price. They can potentially deliver higher return than bullion if the price goes up but fall more sharply if prices dip. This is very different from investing in a gold exchange traded fund (ETF) where the underlying security is physical gold with 99.5 per cent purity and they deliver returns closely matching the price of gold.