Investment in Gold is never new to an Indian. Reliance Mutual Fund has announced a new NFO – Reliance Gold Savings Fund which is primarily an open ended fund and will primarily invest in Reliance Gold Exchange Traded Fund.
The NFO Period is 14th February to 28th February 2011 .
I recommend the fund for the following reasons
· Gold is a less volatile asset. The performance of gold has not only been strong, but it’s volatility has been low
· Gold as an asset over centuries has maintained its value against inflation and considered a hedge against inflation
· An Ideal Portfolio diversifier with very low/negative correlation with other asset classes
· A Safe Haven Asset – During Uncertain times gold affirmed its position as an insurance for investment portfolios.
Gold Still looks attractive
· Strong Investment demand in Major Consumption Nations – India China
· Fundamental weakness in US Dollar & Fear of Inflation
· Central Banks Buying spur
· Geopolitical Uncertainties
The Fund has a benefit of holding gold in a paper form with no need of a Demat account or storing the Gold with the Locker. The Gold which you hold in this fund will also not attract wealth tax. Small investors can also invest in the fund through the SIP route.
The one drawback of the scheme is that being a Fund of Fund scheme the charges of the scheme would be higher. The cost of the normal ETF is around 1% in the scheme the total cost the investor will bear is capped to 1.5%. But it’s worthwhile given it’s advantages like liquidity, SIP route etc.
