India's investors are slowly waking up to the reality that gold is
a good investment option.
In fact, asset management companies' are increasingly trying to
woo investors. An allocation to gold is a standard fixture in many
of the recent new fund offerings and even a bullion fund which was
The Taurus Monthly Income Plan as well as the Axis Triple
Advantage Fund have allocations to gold, in addition to
fixed-income and equity instruments.
Both launched within a day of one another, with Taurus on June
29 and Axis launching its scheme on June 30.
ICICI Prudential also launched its gold exchange traded fund (
), a passive investment vehicle which tracks the price of gold, the
same day. Five days before, on June 25, HDFC too launched its own
Gold products have been positioned based on the metal's relation
to equity markets and its position as a safe-haven during times of
Global factors will continue to influence the price of gold and
the metal has a negative co-relation with equities.
The yellow metal has been steadily rising in recent times, on
account of fears of a sovereign default in Europe as well as a
slowdown in China. It hit a high of $1260.10 per ounce on June
Advisors suggest that investors can consider an investment in
gold but mainly as a hedge against inflation and a guard for
portfolios against economic upheaval.
Gold has run up in recent times, but there is an expectation
that it could rise some more. Maintaining a portion of the
portfolio in gold is good since it has a negative co-relation to
many asset classes including equity.
Financial planners too advise caution while betting on gold
keeping allocations between 5-7%.
If there is a fresh breakout in the euro-zone crisis, there will
be some upside in the short-term as more money seeks safety.
Meanwhile, gold can serve as a hedge though it may not provide much
Nevertheless, there is no lack of choice for investors with a
couple more products having made their debuts even outside of the
launches over the last fortnight.
Canara Robeco Mutual Fund had launched a fund, which plans to
invest up to 35% of its corpus in gold.
The fund, which was launched on May 19, closed after a five-day
extension on June 15. Milestone Capital Advisors also launched its
bullion fund product a month ago. It has exposure to silver as well
Out of the total assets it manages to collect, it would allocate
40% to physical gold and 30% to silver. The remaining 30% would be
allocated to capital-protected gold bonds. The fund aims to garner
Rs 300 crore over two months.