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Prudential ICICI Gold Exchange Traded Fund

January 18th, 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

Entry Filed under: Mutual Funds, Gold ETF, ICICI Prudential MF