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Gleaning the glitter

The Money Today-Plexus Management new fund evaluation brings to you an analysis of the SBI Gold Exchange Trading Fund.

The Money Today-Plexus Management new fund evaluation brings to you an analysis of the SBI Gold Exchange Trading Fund.

FUND FACTS

Offer open: Till April 28

Scheme type: Open-ended gold ETF

Minimum investment: Rs 5,000; unit price: Rs 100

Loads: Entry load: 2.5%; Exit load: Nil

Options: Growth

Investor grievances: C.A. Santosh. Tel: 022-43511611; E-mail: customer.delight@sbimf.com

FUND STATS

Objective: To provide returns that correspond closely with those generated through investment in physical gold. However, the performance of the scheme may differ from that of the underlying asset due to tracking error.

Benchmark: Gold price as per the London Bullion Market Association.

Fund manager: Ritesh Sheth

Asset allocation: 90-100% gold and gold bullion, 0-10% debt & cash equivalent

Comparable existing schemes:

Fund Name: Reliance Gold ETF / UTI Gold ETF

NAV* (Rs): 1,460.7 / 1,500.6

6-month return (%): 9.5 / 10.5

1-year return (%): 21.7 / 23.5

* NAV as on 31 March 2009; Source: NAVIndia

FUND PROGNOSIS

Idea distiller: Gold has shown resilience during the downturn as a reliable hedge to equity and has provided sufficient returns too. This has generated interest among investors and the scheme aims to tap this.

Fund house report: The SBI AMC manages assets worth Rs 26,383 crore across 63 schemes (as on 31 March 2009).

Fund manager’s report: Returns profile 40%, risk profile 60%

Scheme DNA: Four fundamentals of the fund scheme

Unique Idea: Low

Returns Possibility: Medium

Risk: High

Operability/Complexity: Low

INVESTOR TAKEAWAYS

Who should apply: The scheme is for those who are interested in gold trading but find the commodities market too complex to operate in.

Comments: Gold does well when all other assets perform poorly during a downswing, as is the case now. In the long term, however, there are doubts about its sterling performance. Besides, it has already seen a sharp jump over the past year and may not rise further. Use gold not to hold, but to trade and as a mirror to commodity transactions in the precious metal space.