Until now, investors have to open a demat account to hold Gold in e-format. Now without a demat account, the same can be held in mutual fund account.
Currently NFO is open. Closes on Feb-28.
-----------
Gold ? A foundation asset class for wealth creation It is one of the foundation assets for Indian households and a means to accumulate wealth from a long term perspective. Gold investment has been in the culture of Indian tradition and has been on rise amongst the modern investors as well due to the financial uncertainty and inflationary pressures.
Sector View & Outlook Gold as an investment asset has given positive returns for each year during the last decade outpacing most of asset classes. Gold has provided compounded annual return 17.68 % during the decade. Gold ended the decade with a bang and moved up by 29.52 % during the year 2010 making a new high for tenth year in a row.
The risk of sovereign default because of higher debt burden, rising fear of inflation as a result of loose monetary and fiscal policy, uncertainties associated with global growth outlook, thrust for portfolio diversification were few of prim drivers that help gold prices move higher. Situation remains unchanged to a great extent and the concerns that kept gold prices at elevated levels are not yet addressed. The risk ofsovereign debt default continues, concerns over rising inflation and weaker outlook for US dollar still remains. Central banks, having huge Foreign exchange reserves like India and China, have only started diversification away from US dollar and they will require huge quantum of gold for further diversification. All these factors create a constructive environment for higher gold prices.
As per news articles physical demand in India and China remains extremely robust. As per remarks made by the chairman of Shanghai Gold Exchange, China?s gold imports jumped 480% y-y to a record of 209.7 tons in the first 10 months of the current year. Mr. Wang Zhe, General Manager of Shanghai Gold Exchange stated that the imports for first 11 months totaled to 247 tons from 60 tons in FY 2009. He further added that government purchase were not behind the surge. The biggest drivers should be jewellery demand, gold bars for investment and the year end gift-giving. Similarly, Gold imports in India, the world?s largest gold consumer, has likely reached a record last year driven by investment demand according to World Gold Council. As per market sources total gold imports in India amounted to around 750 tons during 2010 compared to around 557 tons of gold imports in 2009. Gold investment demand in India surges 73 per cent in the year ended Sept, 2010.
Gold is likely to continue to benefit due to lower interest rate regime globally, higher inflation expectation, European debts concerns and thrust for portfolio diversification. The longer term outlook for US dollar remains bearish. On a short run dollar may benefit due to concerns over European debt. But over longer term fundamental weakness in US economy will lead to dollar depreciation and that may benefit gold. During the uncertain global environment gold tends to benefit due to its safe haven appeal. Volatility in global markets is likely to go up given the current macroeconomic environment and that is supportive of higher gold prices. The typical characteristic of a bubble in any financial markets are nowhere in sight for gold market and hence gold prices are expected to continue to move higher. Geo political uncertainty is the other important demand drivers for gold.
Source: Bloomberg
Investment Case for Gold-an asset class apart The Yellow metal continues to breach its high(YOY) since 2001 till date.
Past Performance may or may not be sustained in future. The above table and graph gives an illustration of the performance of Gold on the basis of historical data, if invested directly. The same should not be construed as an indication, promise, guarantee or a forecast of any returns. The details may not necessarily provide a basis for comparison with any other investment avenues. Readers are advised to seek independent professional advice and arrive at an informed investment decision before making any investments. Source: Bloomberg, Gold (USD/Oz)
The graph above shows the open, close high and low for a ten year period. The figure in the graph indicates the high level of gold prices for each year.
The gold prices have risen for 10 consecutive years driven by recovery in key sectors of demand and continued global economic uncertainty.
Moreover there is a mismatch in demand and supply of gold with the declining trend of official sector sales. In fact for the first time over two decades, the official sector is set to record net inflows in 2010.(Source: World Gold Council)
The performance of gold has not only been strong, but its volatility also remained low, providing a foundation for a well diversified portfolio.
Asset allocation with gold aims to provide an opportunity to enhance and stabilize returns over a period
Gold as asset over centuries has maintained its value against inflation and considered a hedge against inflation.
In line with this growing gold investment demand combined with India?s culture for buying gold, Reliance Mutual Fund offers Reliance Gold Savings Fund that would enable investors to invest in gold ? the mutual fund way.
Positioning of the Fund Reliance Gold Savings Fund, is the first gold fund of fund in the industry which opens a new avenue for investing in gold as an asset class. The fund seeks to provide returns of gold through investments in Reliance Gold Exchange Traded Fund, which in turn invest in physical gold. It enables you to reap the returns of gold in a paper form without the need of a demat account.
It is a passively managed fund which would enable an investor to save for gold in a convenient manner either through lump sum investment or through systematic investment - the mutual fund way from a long term perspective. It aims to give investors the opportunity to participate in the bullion market in a relatively cost effective and convenient way as you can directly purchase and sell the units at the AMC.
Investment PhilosophyA modern way of accumulating ?Gold? the mutual fund way. An investment opportunity which enables an investor to allocate gold a foundation asset to his portfolio in a systematic way. This fund would enable you to add the yellow metal which is considered as a safe haven, hedge to inflation and diversify your portfolio in a convenient way.
Passively managed Fund of Fund investing in Open-ended Reliance Gold Exchange Traded fund
Invests exclusively in Reliance Gold Exchange Traded Fund which in turn invests in physical gold which shall be of fineness( or purity) of 995 parts per 1000 ( 99.5 % ) or higher
Portfolio focused on providing returns that closely correspond to the returns provided by Reliance Gold Exchange Traded Fund
Benefits of Investing in Reliance Gold Savings Fund
Open door for non - demat a/c holders: Investors can invest in this fund through the physical mode across the country thereby making it easily available and convenient for non demat a/c holders"
Systematic Investment Plan (SIP): a long term disciplined investment technique under which you invest a fixed sum of money on a monthly or quarterly basis in a scheme at the prevailing NAV. This allows you to save and invest regularly while you are earning.
This investment technique enables you the following benefits:
Small, regular investments: A simple way to enter the market by investing small amounts. Small but regular investments go a long way in creating wealth over time
Rupee cost averaging: Fewer units during rising markets and more units during falling markets, thereby reduces the average cost per unit
No need for ?timing the markets?: No need to select the right time and quantity to buy and sell as timing the market is time consuming and risky. It eliminates the need to actively track the markets.
Availability of add-on facilities: Ease of availing add on facilities like Systematic Transfer Plan/ Systematic Withdrawal Plan / Systematic Investment Plan/ auto switch /trigger facility etc.
Liquidity: An investor of Reliance Gold Savings Fund can subscribe and redeem units on all business days directly from the AMC, while purchase and sale of gold ETF units is a factor of liquidity on the exchange.
Ease of investing: Investing in gold through Reliance Gold Savings Fund, the investor can directly subscribe/ redeem units through the physical mode at the various designated investor service centre across the country thereby making it easily accessible and convenient.
Cost Effective: Investing in gold through the Reliance gold Savings Fund in physical application mode enables you invest in a low cost manner as the investor does not have to incur charges like annual maintenance charges for demat account , delivery brokerages charges, transaction charges incurred for investing through the dematerialized mode.
The investors will be bearing the recurring expenses of the scheme, in addition to the expenses of underlying Scheme.
Taxation: Investments in Reliance Gold savings Fund enables you to claim for long term capital gains tax after a period of one year of investments, whereas for physical long term taxation is available after 3 years.
The tax benefits are as per the current Income Tax laws & rules and any other law for the time being in force. Please refer to Statement of Additional Information for more details. Readers are advised to seek independent professional advice and consult their tax advisors and arrive at an informed investment decision before making any investments.
Systematic Investing in Gold- An edge to accumulating wealth Reliance Gold Savings Fund endeavors to inculcate a regular saving habit to your investments in gold through systematic investment plan. It provides an easy and a convenient way to reap the returns of gold through regular and small amount investment.
more details
