Birla Sun Life Commodity Equity - Global Precious Metals Fund may not fetch you a windfall. But one thing is for sure. This can act as a potent tool to iron out equity wrinkles on account of inflationary pressures
BIRLA Sun Life Commodity Equity (BSL CE) - Global Precious Metals Fund has a mandate to invest in equities of companies engaged in mining precious metals across the globe. The scheme can help balance out the volatility in Indian equity indices.
PORTFOLIO:
BSL CE Global Precious Metals Fund has so far managed to garner an investment of just about 3 crore as commodities as an investment option is not yet quite popular in India. These assets are far more subdued compared with the other two popular schemes in the category — DSP Blackrock World Gold Fund with assets under management (AUM) of 1,180 crore and AIG World Gold Fund with AUM of 208 crore.
However, it is important to note that while the two World Gold Funds are feeder funds which invest in companies engaged in extraction of predominantly gold, BSL CE Global Precious Metals fund invests directly in global equities, though it has the mandate to take the feeder route for up to 35% of its assets. A feeder fund is a scheme which invests in equities through another 'parent' mutual fund scheme.BSL CE Global Precious Metals portfolio includes companies engaged in mining precious metals, particularly gold. Some scrips in its portfolio include Barrick Gold, Goldcorp, AngloGold, Kinross Gold, Alamos Gold, Yamana Gold, New Gold, Harmony Gold Mining and Eldorado Gold. These stocks account for about 35% of the fund's equity portfolio.
PERFORMANCE:
BSL CE Global Precious Metals is an international equity fund benchmarked to Dow Jones Precious Metals Index (DJ PM). The scheme has, however, underperformed its benchmark index so far. It registered about 21% gains in 2009 against 37% gains recorded by DJ PM. In 2010, its returns of about 23% were again belittled by 35% gains clocked in by DJ PM. But even as it underperforms its benchmark, this scheme has clearly outperformed the Indian equity indices, especially when the Indian bourses have been facing inflationary pressure. In 2010, while the Nifty managed to gain an upscale of just about 18%, BSL CE - Global Precious Metals Funds was far better placed with 23% gains.
OUR VIEW:
A commodity-centric, international equity mutual fund scheme, BSL CE Global Precious Metals should not be construed as a full-fledged investment avenue. However, one can consider putting in a small proportion of investment into this scheme, simply to diversify portfolio and provide a hedge against inflation.
While BSL CE Global Precious Metals Fund may not result in major gains, one can expect it to act as a catalyst and balance out volatility on Indian equity indices. With inflation showing little signs of easing soon, this scheme may outperform the Nifty returns in the near future.
