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In India, We can invest in Gold in India as Gold funds of funds. Two mutual funds are offering these type of funds in India. An investor in India can invest in these funds run by DSP Black rock and AIG investments in India. Both the companies offer more or less similar schemes. To buy and sell Gold fund of funds is like buying and selling Mutual fund units. No complication in buying and selling these funds. Any one having a Demat account in India can buy and sell these funds. These World Gold Funds are listed in NSE and BSE. So you can buy the units of these Funds from the Stock markets in India in secondary market.
The only thing to remember before investing in these funds, is the risk profile of the Fund. The return offered by these funds are more. So the risk profile of these funds will also be more. These funds are suitable for those who can absorb risks. When compared with other investments in Gold like Gold ETFs or e-Gold, the fluctuation in the unit price is more. So only those investor who can tolerate risks should invest in these scheme. World Gold Fund run by both companies more or less invest in Global or overseas mutual funds which invest in Gold and Gold mining companies and physical Gold and other debt instruments. Since these funds invest in mining companies which are listed in stock markets overseas, the risk profile will be more. Normally when the price of Gold booms, the chances of returns getting better than the returns offered by Gold ETFs or e-Gold in India. Now let us compare and analyse the two Gold funds or Gold fund of funds in detail.
AIG Gold fund is a Gold fund of funds. It is another way of investing Gold in India. It is run in India by the AIG Investments. This fund invest in international securities or stock which are in the productions of Gold, processing of Gold, marketing of Gold. AIG World Gold Fund invest in Gold related products through an international fund- Falcon Gold equity fund. This fund mainly invest in the units of Falcon Gold Equity Fund. When the units of Falcon Gold equity fund appreciates in value, the NAV of the AIG World Gold Fund also appreciates.
AIG World Gold Fund keeps investment ratio of 80-100% in Falcon Gold equity fund and other related mutual funds and the rest of 0-20% in debt instruments.
1) Bench mark
Financial Times Gold mines Total price index in USD is the bench mark of Falcon Gold equity fund.
2) Options available for investors in India.
The scheme offers Growth and Dividend option for the investors in India to invest in AIG Gold Fund
3) Minimum investment and minimum redemption
For SIP and STP, the minimum amount of investment and minimum amount of redemption is Rs.1000.
4) Entry and Exit load for investors in India
There is no Entry load for buying units of AIG WORLD GOLD FUND. 1% exit load will be charged, if the units are redeemed within the first one year of purchase.
5) Expense ratio
As on March 31, 2011 the expense ratio of the fund is 1.5%.
6) Launching date
This fund was launched in India on May 2008.
7) Asset size
Asset size of AIG World Gold Fund as on June 31, 2011 is 206.10crores.
8) Returns
1 year return = 33.20%
2 year return = 27.90%
3year return = 20.20%
(Annualized one year returns are made here)
9) NAV
NAV as on 01/07/2008 = 10.529
NAV as on 26/07/2011 = 15.927
10) Charges
As already said, expense ratio of 1.5% is maintained by AIG WORLD GOLD FUND. Apart from this, you have to bear transaction charges, brokerages, etc....
DSP Black rock fund also invest in Gold and Gold related instruments. DSP Black rock fund is a World Gold fund which invest predominantly in Black Rock Global Funds - Global Gold Funds. It also invest in other mutual funds which invest in Gold related companies in the overseas markets. Like AIG World Gold Fund, it also invest a part of their portfolio in debt and money market instruments.
90-100% of the portfolio will be invested in Black Rock Global Funds - Global Gold Funds and related mutual funds overseas. Rest of the portfolio will be invested in debt and money market instruments.
DSP Black Rock World Gold Fund
| 1 | Scheme available for investment in DSP Black Rock World Gold Fund | 1) Growth |
| 2 | Expense ratio | 1.38%( as on June 2011) |
| 3 | Exit load | 1% if the units are redeemed within one year of purchase |
| 4 | Asset size | 1062 crores (as on June 30, 2011) |
| 5 | Launch date | Aug.2007 |
| 6 | NAV on 1/7/2009 | 12.522 |
| 7 | NAV 26/7/2011 | 19.002 |
| 8 | Returns for said period | 51.70% |
| 9 | Charges of buying and selling | Apart from annual maintenance charges, you have to pay brokerages, transaction charges, and other taxes. |
| 10 | Minimum investment | Rs.5000 |
Comparison of Gold Fund of Funds in India
| DSP Black Rock World Gold Fund | AIG World Gold Fund | |
| NAV as on 01/04/2010 | 14.639 | 11.506 |
| NAV as on 31/03/2011 | 18.542 | 15.649 |
| Returns of World Gold Funds in India | 26.70% | 36% |
| Asset size as on June 30,2011(in crores) | 1062.69 | 207.81 |
| Asset size as on Sep.2011 | 1076.68 | 224.63 |
| NAV as on 16/12/2011 | 18.96 | 15.03 |
| 6 month return | 10.00% | 4.30% |
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