Reliance Gold Savings Fund-NFO: Review Analysis & Details of Reliance Gold Savings Fund

This article contains info about Reliance Mutual Fund Gold Savings FundNFO, Review, Analysis, Details & Opinion. One more NFO or New Fund Offer from one of the largest mutual fund houses of India - Reliance Mutual Fund - has come through. As the name suggests, this is a fund focussed on Gold as an Investment stream. There have been a lot of other Gold Based Investments schemes from other fund houses and now Reliance Mutual Fund has added another product to its portfolio of offerings and this is specific to Gold Investments.
In this article, we will analyse how good is this Reliance Gold Savings Fund NFO, whether this Reliance Gold Savings Fund offers anything new or unique for the investors and whether the investors should invest in Reliance Gold Savings Fund.

Reliance Gold Savings FundNFO: Review Analysis & Details

Let's begin with some basic details about Reliance Gold Savings Fund.

What are the NFO dates for Reliance Gold Savings Fund?
The NFO period for Reliance Gold Savings Fundwill open on February 14th, 2011 and will close on 28th February 2011. So investors interested in applying for this Gold based Fund from Reliance have 14 days.

What is so unique about this Reliance Gold Savings Fund?
Investors must understand this thing very clearly that this is actually a Gold based Fund of Fun scheme (What's this? Fund of Funds Explained).
What this Reliance Gold Savings Fund will do is it will collect money from common investors and instead of buying physical gold, it will actually invest in other Gold Based ETF Funds (like Reliance Gold ETF). This Reliance Gold ETF will then in turn invest your money in physical gold. So your invested money in Reliance Gold Savings Fund will ultimately reach Reliance Gold Exchange Traded Fund.

What's so unique about this kind of 2 level investment setup in Reliance Gold Savings Fund?
Well - these are the claims by the Reliance Gold Savings Fund managers:
1) This Reliance Gold Savings Fund offers SIP investments as little as 100 Rs. This appears to be advantegous since you cannot buy physical gold for just Rs. 100. Even the Gold based ETF units will cost more than that. Hence this Reliance Gold Savings Fund offers a good option for small investors who want to invest in gold.
2) Why invest in ETF? Why not physical gold?
Well - this is a passively managed fund. So what Reliance Mutual Fund is doing is using its already available Gold Based ETF for investment, so that they dont end up offering 2 similar competitive products. An ETF is an ETF - it trades like a stock and prices fluctuate and can go high. Here is an Example of Nifty based ETF. ETF may not be offering you a SIP facility. Hence Reliance Gold Savings Fund is offering a gold based passively managed mutual fund to let investors invest small amounts through SIP in Gold.
This being a mutual fund, it does not require demat account. While for ETF trading, one surely needs demat.

Standard options for investments like any other mutual fund:
Growth and dividend plan. The dividend plan offers dividend payout and reinvestment option.
The minimum application amount for Reliance Gold Savings Fund is Rs. 5000 and afterwards in multiples of Rs. 1.

Reliance Gold Savings Fund Entry Load: Nil
Reliance Gold Savings Fund Exit Load: 2% if exit within 1 year; Nil After one year

However, since this is a fund of fund scheme, there might be ETF expense charges that one needs to you. As per SEBI, this charges can be a maximum of 1.5%. Investors should be aware of this while investing in Reliance Gold Savings Fund.

What are the other competitor products available in comparison to Reliance Gold Savings Fund?
Kotak Gold Savings Fund-NFO: Review - an exact replica of the Reliance Gold Saving Fund - NFO Open from 4th March 2011 to 18th March 2011

There are a lot of Gold based ETF's and Gold based Mutual Funds available:
List of Gold ETF India available for trading on NSE

Recently, HDFC came out with HDFC Gold ETF NFO: Review Analysis & Details

Then there is the good old Quantum Gold Fund (Gold ETF)

and ICICI Prudential Gold ETF, then SBI GETS-SBI Gold ETF NFO Review: SBI Gold Exchange Traded Scheme

If you are interested in looking at how Gold prices have performed historically, see Gold ETF: Historical Performace of Gold ETF

Final Thoughts about Reliance Gold Savings Fund?
Being a passively managed Mutual Fund focussed on Gold, that too investment will be only in Reliance Gold ETF, this product might be suitable for investors who just want to dump their money into Gold based products and let the fund managers play with their money. However, still I have the opinion that gold based ETF's - both for long term investments and short term trading - offer a lot better option.
The only good point I see here is that this Reliance Gold Savings Fund offers SIP for a very low amount - which might be effective option for small investors. At the same time, investors should also cross-check the same option for investing in their own SIP investments in available ETF's