AIG World Gold Fund Review

AIG Investments have come out with an NFO or New Fund offer, for a fund dedicated to investing only in the Gold based business.
The fund is called the AIG World Gold Fund.

What is the offer period or subscription dates for AIG World Gold Fund?
The fund will accept applications from April 15th to may 14th.

When will the fund re-open for further purchase and redemption?
The AIG World Gold Fund will again open on June 12, 2008

What is the AIG World Gold Fund all about?
The primary objective of the AIG World Gold Fund is to capitalize and gain from the stocks and other instruments based in the gold business – namely, processing, extracting & marketing of gold. Interestingly, the company or the AIG World Gold Fund will NOT be purchasing the shares of the Gold business based companies directly. Instead, what it will do is simply invest the investors money into the Zurich based AIG PB Equity Gold Fund. This is the fund which will actually invest in the stocks and other instruments of gold based company. Hence, for the investors in India, it is only a simple business of buying units of a fund, which will invest in another fund units. (Read: How fund of Funds work?)

Since they are simply collecting money from investors here, and investing in some other fund, why are they taking the fund management charges? How about simply buying a gold based ETF, instead of paying heavy fund management charges to the AIG World Gold Fund?

Moreover, AIG is the same company which has lost heavily on derivatives recently

Related: Quantum Gold based ETF, Investing in Gold?

What is the underlying principles behind the AIG World Gold Fund?
Simple and straightforward, since the gold prices have going up in the recent past, so the fund management is betting on the assumption that it will go up in future as well. Ultimately, it’s the investors who have to take the call.

What is the risk involved in AIG World Gold Fund?
High Correlation and dependency on gold prices. What is you buy this fund unit when gold price is at 12,000 and for the next 5 years the gold prices keep falling down.

What about Entry and exit load information of AIG World Gold Fund?
No information is available about the entry and exit load of AIG World Gold Fund.

But definitely there will be the standard charges minimum 2.25% (my assumption, please check while applying for this gold fund) Any tax benefit available in AIG World Gold Fund? No tax benefit is available.

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