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- What to consider before buying a Gold ETF in India
- IDBI Rajiv Gandhi Equity Savings Scheme Series I Plan A
- How to invest in Gold Savings Fund?
| What to consider before buying a Gold ETF in India Posted: 11 Feb 2013 02:43 AM PST Download Mutual Fund Application Forms
Below are the Factors one should before selecting a Gold ETF in India:
Gold ETF mode of investment in India is catching fast with the investing community. New and new mutual fund houses are coming with Gold ETF. With the new entries, Gold ETF industry is heating up and investor is getting lot of selection and variation nowadays. Before selecting a particular Gold ETF in India, you should consider the following points. These points helps you to make better decision in the selection of a Gold ETF in India.
1) Expense ratio
Gold ETFs are run by mutual fund industries. These mutual funds charge annual maintenance charges and fund managements expenses from you. These costs may decrease the value of your investment. Gold is not like equity where the latter give return from 10% to 30% on an average. Gold is a fine investment if it gives a return of minimum of 5%. Anything more than that is a bonus. So with this type of return, if the fund houses charges more costs and expenses, then your investment reduces by that much. So always select the Gold ETF which is charges less expenses.
2) Average Daily Volume of the Gold ETF traded in the exchanges.
Find out in various financial websites and exchange's websites, the daily volume traded for the particular Gold ETF. If the Volume is too low, then skip that Gold ETF. If the volume is too low then you have increase your purchase price and reduce your selling price. So you may be at a loss. You may not get the market price of the Gold due to decrease in the volume.
3) Tracking errors
A Gold ETF's NAV is deemed to represent the market price of the Gold at a particular time. It is not necessary to be so. Tracking error is how much a Gold ETF varies with the market price of the Gold. More the tracking error of the Gold ETF, more the variation of the Gold ETF from the market price of the Gold. If the tracking error is low, then it is a sign that the Gold ETF is going in the same way with that of the Market price of the Gold. Investor should select the Gold ETF with lower tracking error. Tracking errors are possible due to fund management expenses, illiquidity of Gold, large buy and sell orders, etc.
1) Minimum Investment
In India Gold ETFs are available for investment from Rs.5000 to Rs.20000. Go with the Gold ETF which is going well along with your financial capacity and financial goals.
2) Impact costs
Impact cost in Gold ETF is related with Volume of the Gold ETF traded in the Exchanges. Lower the volume of the Gold ETF traded, high may be the Impact costs. When the volume is low, the bid and ask spread is high. You have to increase your purchase price in order to buy the Gold ETF and you have to reduce the Sales price in order to get the Gold ETF. One should select and invest in a Gold ETF which is having less impact cost.
6)Plan type
Two type of Gold ETF plans are available for investment in India.
a) Dividend option and
b) Growth option.
In dividend option you will be getting dividends, when the price of Gold increases dramatically. But you have to pay dividend distribution tax.
In the Growth option, no dividends, so no dividend distribution tax, only long term capital gain tax which is applicable after one year.
Always consult your financial consultant before taking decision about the investment in Gold ETF. --------------------------------------------- Invest Mutual Funds Online Download Mutual Fund Application Forms from all AMCs Download Mutual Fund Application Forms Best Performing Mutual Funds
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| IDBI Rajiv Gandhi Equity Savings Scheme Series I Plan A Posted: 10 Feb 2013 11:01 PM PST Invest In Tax Saving Mutual Funds Online Call 0 94 8300 8300 (India)
IDBI Mutual Fund has announced the launch of IDBI Rajiv Gandhi Equity Savings Scheme Series I Plan A. The New Fund Offer Period starts from February 9, 2013 and closes on March 9, 2013. The allotment of units and mailing of statements of Accounts shall be made within 15 days from the closure of the New Fund Offer in accordance with the SEBI circular dated February 6, 2013. Happy Investing!! We can help. Call 0 94 8300 8300 (India) Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com
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| How to invest in Gold Savings Fund? Posted: 10 Feb 2013 07:23 PM PST Download Mutual Fund Application Forms
A new type of investment in Gold is developing in India via Gold savings funds. It is mainly intended for those investors who don't have Demat account. For those sections of the society who can't invest in Gold ETF because of not possessing Demat account, can now invest in Gold ETFs via Gold fund of funds run by Reliance. This Gold Savings funds mainly invest in Gold ETFs run by the parent mutual fund and other instruments like fixed deposit etc... For example, in case of Reliance Gold savings fund, it buy the units of Reliance Gold ETF and Kotak Gold savings fund buy the units of Kotak Gold ETF.
The investor can buy and sell the units of Gold savings fund by walking into the branches of Asset management Company. It is cost effective and convenient way of purchasing Gold in India. It is a open ended fund. When you buy Gold Savings fund from Reliance, they in turn buy the units of Reliance Gold ETF. Thus you are assured of 99.5 % purity of Gold that you are buying.
Another important advantage of this fund is the SIP option. You can invest as minimum as Rs.100. You can increase the amount of SIP later. So considering all these factors Gold Savings funds can become well worthy to consider.
At present, below mutual fund houses are offering Gold Saving Schemes.
· Reliance mutual fund,
· SBI mutual fund and
· Kotak mutual fund,
· HDFC Mutual Fund,
· ICICI Prudential Mutual Fund,
· Birla Mutual Fund.
There is not much to differentiate among them. All funds invest in the Gold ETF run by them.
Advantages of Investing in Gold Savings Funds
1. First and foremost advantage of Gold savings fund is the avoidance of Demat account. All sections of society can buy and sell units of Gold Savings fund. Demat account is not needed.
2. You can buy and sell units of funds in a hassle free manner. No complications.
3. Presence of easy and small SIPs and EMI's is boon for common people who don't have too much disposable income.
4. You can average your price since you can invest every month's price of Gold
5. Taxation benefits of long term capital gain tax after one year.
Disadvantages of Investing in Gold Savings Funds
1. High expense ratio when compared with Gold ETF in India. Normally expense ratio can come to 1.5% to 2.5% when all expenses are calculated.
2. Exit load of 1.25% to 2% if redeemed before one year. 3. Funds present now, only invest in the Gold ETF run by the parent company. It should have been more than one Gold ETF. If the parent Gold ETF produces less returns, then the Gold fund will also give less returns. -------------------------------------------- Invest Mutual Funds Online Download Mutual Fund Application Forms from all AMCs Download Mutual Fund Application Forms Best Performing Mutual Funds
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