Akash Jha
DSP Gold ETF: DSP Mutual Fund has introduced a new open-ended fund-of-fund (FoF) scheme that invests in DSP Gold ETF, called the DSP Gold ETF Fund of Fund, specifically for gold investors. Today (November 3) marks the beginning of a 10-day period during which the NFO (new fund offer) for the same will be available.
A new fund offer, or NFO for short, is a subscription offer for a mutual fund that has just been introduced to the market.
In addition, a ‘Fund of Funds’ (FOF) is an investment strategy that holds a portfolio of other investment funds rather than investing directly in stocks, bonds, or other securities. Most of the money in a FOF plan goes towards buying shares in another mutual fund. Multi-manager investment, as explained by AMFI, is a common term for this strategy.
The minimal connection between gold and equities and debt makes it an excellent complement to a traditional portfolio. Anil Ghelani, CFA, Head of Passive Investments & Products, DSP Mutual Fund, says the scheme structure offers a simple solution to diversify your portfolio and systematically accumulate gold.
Gold is receiving a lot of attention because of the stagnation in gold supply and rising demand from central banks throughout the world. When the currency has been weak, gold investments have historically done well. Moreover, gold’s negative or low correlation with equities over time makes it a viable alternative to equities as a diversifier. The DSP Gold ETF Fund of Fund allows investors to have exposure to the Gold market while benefiting from the ease of digital ownership and the absence of a need for a demat account. In addition to offering a convenient option to invest regularly in Gold through SIPs, it also allows investors to freely sell their holdings whenever they like.
Since gold’s price tends to fluctuate in the opposite direction of most other asset classes, including it in one’s portfolio can help to smooth out the ups and downs of the investment trip. Therefore, diversifying one’s holdings by include gold in one’s portfolio might cushion the blow of market declines. When investing in cyclical asset classes, however, timing your entry incorrectly can have a significant influence on short-term returns.
Here is a quick lowdown on what’s on offer:
Investment objective
The investment objective of the program is to create returns by investing in units of the DSP Gold ETF, which in turn deploys corpus in genuine gold, so giving investors exposure to physical gold of the greatest purity. There are two men in charge of the scheme’s funds: Anil Ghelani and Diipesh Shah.
Scheme benchmark
The plan will be measured against the domestic price of physical gold [based on the daily spot fixing price of gold as determined by the London Bullion Market Association (LBMA)].
Investment required
Any amount over Rs 100 can be invested in a single transaction through our lump sum investment options (SIP, SWP, and STP). The plan includes both traditional and direct plans, as well as expansion and IDCW choices. The funds might have been invested either directly with the program or on the secondary market.
Asset allocation
Under normal conditions, the FoF plan will hold 95-100 percent of its assets in DSP Gold ETF units and 0-5 percent in cash and financial equivalents.
Risk profile
Investors should be aware that the scheme-specific risk factors of DSP Gold ETFs will apply.
It should be noted that the scheme’s performance will be mostly determined by the performance of the underlying ETF.
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