In this article, we will analyse how good is this Canara Robeco InDiGo Fund NFO, whether this Canara Robeco InDiGo Fund offers anything new or unique for the investors and whether the investors should invest in Canara Robeco InDiGo Fund .
Canara Robeco InDiGo Fund NFO: Review Analysis & Details
Let's begin with some basic details about Canara Robeco InDiGo Fund.What are the NFO dates for Canara Robeco InDiGo Fund ?
The NFO period for Canara Robeco InDiGo Fund is currently open and will close on 15th June 2010.
What is so unique about this Canara Robeco InDiGo Fund?
The Canara Robeco InDiGo Fund is going to invest in two class of securities - Gold ETF's and Debt related money market instruments. The word Gold ETF may make the investors think that it is an aggressive style equity fund, but the Canara Fund house is calling it a debt oriented fund.
The word InDiGo is actually derived from a combination of many terms - INcome from Debt instruments and GOld, so the name INDIGO.Anyways, going beyind the names, the fund will primarily invest in Gold based ETF's. Here is a list of Gold based ETF's available in India and here is the article about Gold ETF: Historical Performace of Gold ETF in India.
So this Canara Robeco InDiGo Fund will primarily invest the capital collected from investors in the available Gold ETF's and try to generate the returns from the gold based investments. The way this investment returns will be capitalized is to trade or invest in gold etf's based on the seasonal effects like festivals and marriages, when the demand of gold is on the higher side, and so on. However, as an analyst, I seriously doubt that point. Off late, we have seen a lot of fluctuations in gold prices which are not based upon indian festivals and occassions, but by international demand, dollar rupee exchange rate, oil prices and so on. So ultimately, its the fund manager's take on how and when will he be able to capitalize on Gold prices by trading/investing in the gold based ETF's in India.
Some portion of money will also be invested in the debt securities, like the money market instruments. This is for prividing some income in accrued form and for redemption needs. Although I could locate details about what proportion will be invested in Gold ETF's (just 10% to 35%) and how much will go in Debt securities (65% to 90%), going by the advertising which shows and old lady in traditional indian wear weraing loads of gold ornaments, it gives an impression that it will be primarily in Gold, which is not true.
So the Canara Robeco InDiGo Fund will be a good fit for investors who believe in the Gold based story. This fund automatically offers a good diversified mix of gold with some debt securities. So in its way, for the people who just want to go the Mutual Fund way, this fund is something unique. However, as an analyst who knows about the available options in the market, I would like to go for investing in two seperate things - Some more in Gold Based ETF's (list available at the link above) and rest in debt instruments. Just an option which the potential investors might like to consider.
However, if you wish to keep the headaches off and rely on the investment and trading skills of the Canara Robeco Mutual Fund Managers, then you can invest in this fund.
Hence, it again boils down to the trading activites of the fund manager.
Are there any alternatives to Canara Robeco InDiGo Fund?
Yes. As stated above, one can look for investing on his own in Gold based ETF's available in India and some portion in bonds or other dent securities. For any mutual funds, we recommend going for equivalent ETF or Exchange Traded Funds on the same underlying index. They come with the benefit of exact tick by tick price movements, rather than end of the day NAV. That allows traders to benefit from intra-day price movements and make good money. Although they incur brokerage charges which vary from broker to broker. (See trading example of an ETF)
The Canara Robeco InDiGo Fund will be benchmarked to CRISIL Short Term Bond Fund Index + Price of Gold (neutral allocation: 65:35) Mr. Ritesh Jain will be the Fund manager for Canara Robeco InDiGo Fund.
Minimum Investment:
Purchases : Rs. 5000/- and in multiple of Re. 1 thereafter.
SIP or Systematic Investment Plan is also available - Minimum instalment amount 2,000 and 1,000 respectively for quarterly and monthly frequency respectively and in multiples of Re 1 thereafter .
Investment Options for Canara Robeco InDiGo Fund :
- Growth
- Dividend (Payout and Reinvestment)
No Tax Benefit is available in the Canara Robeco InDiGo Fund
The entry load for Canara Robeco InDiGo Fund is as follows:
Entry Load for Canara Robeco InDiGo Fund :
Zero Entry Load
Exit Load for Canara Robeco InDiGo Fund:
Exit within 1 year from the date of allotment - 1 %;
Exit after 1 year from the date of allotment - Nil
Final Thoughts about the Canara Robeco InDiGo Fund?
By investing in this fund, one is betting on the skills of the fund manager on how well he can keep tracking the gold prices efficiently and makes his trades on behalf of the investors for the same
3 comments:
Very nice article. I liked the contents and the openness and sincerity of expression. Thanks and God bless!
Just one thing is not clear and information is not available as to what % gains are expected on yearly basis. Is this a better bet than FD in bank?
Bharat.
@BHARAT,
Well, no one can confirm the future....
forget about returns better than FD, the Gold investments might take a loss if gold prices plunge from record high levels.
Although the majority of investments is in Debt funds, which are considered to be risk free, even they are not that risk free as perceived. Remember Lehman Brothers collapse and what happened to the bonds issued by Lehman??
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