Posts filed under 'Gold ETF'
More mutual funds begins to race into the Gold ETF market. After Benchmark, UTI Mutual Fund, Kotak Mutual Fund, Prudential ICICI, Tata Mutual Fund and Escorts, the latest entrant expressing interest in launching a Gold Exchange Traded Fund (GETF) is Birla Sun Life Mutual Fund.
Birla Sunlife MF filed a draft offer document before SEBI for its upcoming Open ended Exchange Traded Scheme titled Birla Sun Life Gold Exchange Traded Fund. Investment objective of this fund is to endeavor to provide returns that, before expenses, closely track the performance and yield of Gold or Gold related instruments subject to tracking errors.
Flexibility is one area that this scheme is featuring a lot. According to the document filed, The Mutual Fund will allow investors the flexibility to switch their investments from any other scheme(s) / plans offered by the Mutual Birla Sun Life Gold Exchange Traded Fund 4 investments from any other scheme(s) / plans offered by the Mutual Fund to Birla Sun Life Gold Exchange Traded Fund (subject to completion of lock-in period, if any, of the units of the scheme(s) from where the units are being switched) during the NFO period and on ongoing basis thereafter.
The Minimum Application Amount during the NFO period is Rs. 5,000/ - and in multiples of Re. 1/- thereafter during the NFO
period. The Minimum Application Amount on Ongoing basis is Rs. 500/ - and in multiples of Re. 1/ - thereafter.
In regard to the load structures, the Entry Load is as follows:
For purchases/ switch – in of units upto Rs. 10 Lacs: 3%
For purchases/ switch – in of units greater than Rs. 10
Lacs but upto Rs. 1 crore: 1.50%
For purchases/ switch – in of units greater than Rs. 1
crore but upto Rs. 5 crores: 0.25%
For purchases/ switch – in of units greater than Rs. 5 crores: Nil
The Exit Load will be as follows:
Not exceeding: 0.50%.
However, the Trustee shall have a right to prescribe or modify the load
structure with prospective effect subject to a maximum prescribed
under the Regulations.
February 14th, 2007
Escorts Mutual Fund has filed a draft offer document for its proposed Escorts Gold Exchange Traded Fund before SEBI. Escorts is the latest entrant into the Gold Exchange Traded Funds. It may already be recalled that Benchmark, UTI, Kotak, ICICI Pru have already put up their plans for the Gold ETFs and are in various stages of going to the investors.
According to the draft offer document, Escorts Gold Exchange Traded Fund will be an open ended fund which will be listed on the Exchange in the form of an Exchange Traded Fund (ETF) tracking domestic prices of gold through investments physical Gold and Gold related instruments, which have Gold as underlying, as specified by SEBI from time to time.
The primary objective of the scheme is to provide returns that, before expenses, closely correspond to the returns provided by domestic price of gold by investing predominantly in Gold and Gold related instruments, which have Gold as underlying, as specified by SEBI from time to time. It is intended to constitute a simple and cost effective means of making an investment similar to an investment in Gold. The value of units shall reflect, at any given time, the price of Gold and Gold related instruments owned by the scheme less the expenses incurred.
The offer document filed is really very informative and also had a section about where the investors money will be put. Amongst the methods of investments in gold are: Bullion, Coins, Gold Certificates, Gold Accounts and Gold shares. Gold shares are actually shares of companies that are into Gold mining business.
Finally, if you wish to invest in this fund, the minimum application amount is Rs.5000 and in multiples of Rs. 1000 there after.
February 10th, 2007
Benchmark Mutual Fund has become the first to bring the Gold Exchange Traded Fund (GETF) to the market and has set a new milestone in the Indian Mutual Fund Industry. The NFO of the Gold Benchmark Exchange Traded Scheme (Gold BeES) will be open from Feb 15 to 23, 2007. Rs. 10,000 is the minimum investment and investors can put in multiples of Rs. 1000 thereon.
Here is some info on this:
Gold Benchmark Exchange Traded Scheme (Gold BeES) offers investors an innovative, cost-efficient and secure way to access the gold market. Gold BeES is intended to offer investors a means of participating in the gold bullion market without taking physical delivery of gold, and to buy and sell on National Stock Exchange (NSE).
UTI Mutual Fund, Kotak Mutual Fund, Prudential ICICI and Tata Mutual Fund have all filed draft offer documents with SEBI for their Gold ETF funds and are in various stages of processing.
Many Personal Finance Advisors say that prudent investors can add Gold ETFs to their portfolio to have a proper balance and weightage to their wealth generation plan.
February 2nd, 2007
The latest to file draft prospectus for Gold Exchange Traded Fund is Prudential ICICI. The fund is an open-ended fund listed on one or more of the Stock Exchanges in the form of Gold Exchange Traded Fund (ETF) tracking the Gold bullion.
One section of the draft document on the SEBI’s website is highlighted that catches immediate attention:
The Mutual Fund Scheme shall not make any investment in:
1. any unlisted security of an associate or group company of the Sponsor; or
2. any security issued by way of private placement by an associate or group company of the Sponsor; or
3. the listed securities of group companies of the Sponsor which is in excess of 25% of its net assets.
Some key points from the draft prospectus:
Highlights
The scheme is an Open Ended Fund, which will be listed on one or more of the Exchange in the form of a Gold Exchange Traded Fund (ETF) tracking domestic prices of gold through investments physical Gold.
1. It is designed to provide returns that, closely correspond to the Returns provided by Gold subject to tracking errors. Each unit of scheme being offered will have a face value of Rs. 10 each subject to the applicable entry load.
2. Units of Gold ETF can be bought/sold like any other stock on the Bombay Stock Exchange Ltd (BSE) or on any other exchange where it is listed. Investors can also choose to buy units from the Fund directly, on each business day, however the redemptions from the Fund would be allowed only during the liquidity period.
3. Gold ETF will be available only in dematerialized form. This will help in consolidating with Other portfolio holdings and will eliminate need for physical storage thereby eliminating Risk.
4. AMC reserves a right to appoint an authorized participant in future.
Investment Objectives - To provide investment returns that, before expenses, closely track the performance and yield of domestic prices of Gold derived from the LBMA AM fixing prices.
Transparency – AMC will calculate and disclose the first NAV not later than 30 days from the closure of the New Fund Offer Period. Subsequently, the NAV will be calculated and disclosed at the close of every Business Day. In addition, the AMC will disclose details of the portfolio at least on a half-yearly basis.
Load
Entry Load- 1%
Exit Load- Not exceeding 0.5%.
Minimum Application Amount
Rs. 5000 and in multiples of Re. 1 thereafter
Minimum Additional Application Amount
Rs. 500 and in multiples of Re. 1 thereafter
De materialization
(a) PruICICI Gold units will be available only in the dematerialized form.
(b) Applicants under the scheme will be required to have a beneficiary account with a DP of NSDL/ CDSL and will be required to indicate in the application the DP’s name, DP ID number and its beneficiary account number with the DP.
(c) Since PruICICI Gold units are to be issued / repurchased and traded compulsorily in dematerialized form, no request for rematerialisation of PruICICI Gold units will be entertained. Liquidity Period 27th, 28th, 29th day of odd months i.e. January, March, May, July, September and November. If 29th happens to be a non business day, the next business day after 29th
January 18th, 2007
As expected at the beginning of the year, the Gold Exchange Traded Funds are nearing their launch dates. Market sources say that AMFI is planning to give the green signal to these in the next month. With these schemes, as minimum as 1 gram gold can be bough through the scheme.
Indian Gold ETFs
Benchmark Mutual Fund, UTI Mutual Fund and Kotak Mutual Fund are already in queue and have filed offer documents before the market regulator for the nod. UTI Mutual Fund is in tie up with State Street Global Markets (SSgA) LLC as its investment advisor for overseas market. It may be recalled SSgA is one of the early people who are into Gold ETFs internationally.
Kotak Mutual Fund has recently filed its application before the SEBI for the Gold ETF and is awaiting the SEBI’s nod. The Draft Offer Document filed by Kotak Mutual Fund the fund will be an open-ended Gold ETF. The Units will be available at Rs. 10 each plus applicable load at the NFO time and at the applicable NAV during the continuous offer. (Entry load of 4% and exit load of 1%)
The fund objective is “The investment objective of the scheme is to generate returns that are in line with the performance of gold and gold related instruments, subject to tracking errors. However, investments in gold related instruments will be made if and when SEBI permits mutual funds to invest in gold related instruments.”
The fund will put in investors money into “gold, and endeavor to track the spot price of gold. The Fund may engage in gold lending, deposit gold with banks in return for fees to the extent permitted by Regulations The Fund may also invest in gold related instruments and bank deposits
to the extent regulations permit. The fund would invest all the residual funds after investing in gold in debt and money market instruments.”
The Global Experience
Global market experts however suggest investors to be a bit cautious about GETFs – particularly because even the finance market haven US does not have enough experience in this region.
Gold ETFs allow even normal people to buy gold units for as little as Rs. 100 and could trade them just like units of their mutual funds. However, it should be remembered that the gold in question here is 24 carat gold instead of the yellowish ornamental gold. Thus, GETFs should be used only when we wish to use it as an investment option rather than buying gold for making ornaments.
January 15th, 2007
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