Gold Equity Fund
@goodfundadvisor (671)
India
May 15, 2011 11:41am CST
Gold is considered a counter to Equity.
Equity has proved to be the BEST asset class but is prove to high volatility.
Suddenly, the Mutual Fund companies seem to have woken to this trend of combining the two asset classes into one single fund.
thus, we have UTI Wealth Builder Fund and now the sundaram Equity Plus Fund.
Do you think it is wise to invest in these funds??
Or don't you think it would be prudent to invest in a Diversified Equtiy Fund and again separately invest in a Gold ETFs???
What do you mylotters???
Srikanth matrubai
1 response
@RajaKrsnan (39)
• India
16 May 11
Personally I feel equity returns will always outperform other assets in the longer run. In the last couple of years the precious metals and other commodities are in lime light, especially after the financial crisis. Its better to have some investments in gold and make the best out of it when one can.
Mutual funds are generally late comers and when they come, they all join the rat race together or in succession. I am wondering why these mutual funds did not float a gold fund when the price of gold was below Rs.900/- per gram. What was their fund managers doing then? Its sure that one will make small profits, but the exit options will be very tough to book profits fully.
I feel the Gold ETFs are better option than the mutual fund way as the entry exit is easier with ETFs. Go for the ETF way.
@goodfundadvisor (671)
• India
16 May 11
Excellent analysis Raja Sir.
Can't agree with you more.
Equities are the BEST Asset Class in the long run. I will stick out my neck and even say that Equities are better than even Real Estate.
But, I beg to differ on some points. Mutual funds are not late comers.
These gold equity funds are in vogue for more than 2 years now and in some cases like the DSPBR World Gold Fund, they are in vogue for nearly 5 years now. And remember, when DSP came out with its Gold Fund, the Gold was only $800!!!!
It is not that they are late, but if they came when Gold was Rs.900 as you said, WHO would invest?? Actually, yes, that is the best time to invest, but which investor would invest. With NIL commission on distributing Mutual Funds, agents would not advise Mutual Funds to their clients....and in that negative sentiment, selling becomes even more difficult.
But, yes, a true advisor, would recommend the fund, but how many are in the field,,.....one can count on fingertips.
Gold ETFs are good, but even they come with some disadvantages like compulsory Demat accounts, Loads, etc.
For best way to make money through Gold is to invest through sip in Gold Savings Fund like Reliance Gold Savings fund or Kotak Gold savings fund.
Regards,
Srikanth Matrubai
