High on the heels of the other fund houses, the Birla Sun Life Mutual Fund house has also joined the bandwagon and launched its Gold based ETF or Gold Exchange Traded Fund
In this article, we will analyse how good is this Birla Sun Life Gold ETF NFO, whether this Birla Sun Life Gold ETF offers anything new or unique for the investors and whether the investors should invest in Birla Sun Life Gold ETF.
Birla Sun Life Gold ETF NFO: Review Analysis & Details
Let's begin with some basic details about Birla Sun Life Gold ETF.What are the NFO dates for Birla Sun Life Gold ETF?
The NFO period for Birla Sun Life Gold ETF will open on April 25th, 2011 and will close on 9 May 2011.
What is so unique about this Birla Sun Life Gold ETF?
This is another Gold based ETF which is being lauched in the Indian Mutual Fund and ETF market. The Birla Sun Life Gold ETF will track the performance and prices of physical gold in the domestic gold market. Being an ETF or Exchange Traded Fund, this will also given short term traders a good opportunity to trade the tick by tick price movements and benefit.
Anyways, there appears nothing unique about this Birla Sun Life Gold ETF as compared to other Gold based ETF's which are already there in the market.
The minimum application amount for Birla Sun Life Gold ETF is Rs. 6,000 and afterwards in multiples of Rs. 2,000 thereafter.
The face value for each unit of ETF will be Rs. 10.
Mr. Satyabrata Mohanty will be the fund manager for this Gold ETF.
The Birla Sun Life Gold ETF will be listed on both NSE and BSE post the NFO period.
No tax benefit will be available in Birla Sun Life Gold ETF.
What are the other competitor products available in comparison to Birla Sun Life Gold ETF?
There is a lot of choice for Gold based ETF's as there are a lot of Gold based ETF's and Gold based Mutual Funds available:
Here is the 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
Then there is the recently lauched Reliance Gold Savings Fund and Kotak Gold Savings Fund
What are the risks of investing and trading Birla Sun Life Gold ETF?
Since this is directly tracking the prices of Gold in the domestic Indian market, the investor will have to take the risk of decline in the Gold prices. Although gold prices (along with silver) have been shooting up and up in the recent times, there is no guarantee that it will continue to do so in future as well.
To udnerstand this, the best way is to look for historical gold prices. If you are interested in looking at how Gold prices have performed historically, see Gold ETF: Historical Performace of Gold ETF
Another risk comes in from the tracking error. Remember, the fund manager doesn't invest all your money in gold. Only around 95% is invested in gold, while rest is kept in debt instruments and cash holding, so as to take care of creation of new units as per the demand and redemption requests. Hence, there may not be a tick by tick correlation between the Birla Sun Life Gold ETF prices and the actual godl prices and hence comes the tracking error.
Other Gold Schemes Currently Open: Quantum Gold Savings Fund
Final Thoughts about Birla Sun Life Gold ETF?
Nothing special - this is just another gold based ETF in India where already many gold etf's are existing
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