Gold-linked products flood Indian market

By
A A A

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 launched recently.

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 ( ETF ), a passive investment vehicle which tracks the price of gold, the same day. Five days before, on June 25, HDFC too launched its own ETF.

Gold products have been positioned based on the metal's relation to equity markets and its position as a safe-haven during times of economic distress.

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 21.

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 asset appreciation.

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 as gold.

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.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Commodities

Referenced Stocks: ETF

International Business Times

International Business Times
  • See all for International Business Times
  • View Print Version

More from International Business Times:

Related Videos

Quick on Your Feet
Quick on Your Feet                  
Early Entrepreneurship
Early Entrepreneurship              
Trying to Be Goofy
Trying to Be Goofy                  

Stocks

Referenced

100%

Most Active by Volume

48,099,947
  • $16.09 ▲ 0.50%
40,277,806
  • $102.50 ▲ 0.24%
40,236,499
  • $19.57 ▲ 2.35%
31,092,510
  • $49.75 ▲ 0.65%
30,795,218
  • $34.92 ▲ 0.78%
29,910,855
  • $3.63 ▲ 0.83%
24,019,154
  • $13.06 ▼ 0.38%
23,753,906
  • $74.82 ▲ 1.31%
As of 8/29/2014, 04:04 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com