Another renowned mutual fund house, Axis Mutual Fund house, has joined the bandwagon of so called Gold Saving Funds and come out with a new fund offer or NFO, for its newly launched fund called Axis Gold Fund
The Axis Mutual Fund House is launching their Axis Gold Fund. In this article, we will analyze how good is this Axis Gold Fund NFO, whether this Axis Gold Fund offers anything new or unique for the investors and whether the investors should invest in Axis Gold Fund.
Axis Gold Fund NFO: Review Analysis & Details
Let's begin with some basic details about Axis Gold Fund.What are the NFO dates for Axis Gold Fund?
The NFO period for Axis Gold Fund is from 30 September and will close on 14 October 2011. After the NFO period, the regular buying and redemption of fund units will start, on date 28th October 2011.
What is so unique about this Axis Gold Fund?
Investors should undestand this very clearly that this is actually a Fund of Fund (What's this?). What it means is that this fund will not invest in any Gold companies or Gold stocks diectly, instead it will invest in other fund, Called Axis Gold ETF or Exchange Traded Fund. It is this ETF which will actually invest in physical gold.
What this Axis Gold Fund will do is collect money from investors (either one time or multiple times through SIP or Systematic Investment Plan) and invest that money in Axis Gold Exchange Traded Fund - the Gold ETF from Axis MF.
Now, we've written a lot about these so called "Gold Funds" or "Gold Savings Funds".
They offer low amount investments in gold (although this Axis Gold Fund requires minimum 1000 Rs. investment, other Gold Funds need only Rs. 100). They do not require demat account, etc.
But they do come with disadvantages like you cannot trade in them on real time basis as this pricing in based on End of the day NAV kind of model. See more articles in next section about competitor products to better understand this gold fund business.
What are the other competitor products available in comparison to Axis Gold Fund?
The recently lauched ICICI Gold Savings Fund, SBI Gold Fund and Reliance Gold Savings Fund (See Review & Details) are the biggest and direct competitor to Axis Gold Fund - the two products from Kotak and Reliance Fund houses work in almost the same way.
Other than that, 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
Other Gold Schemes: Quantum Gold Fund
What are the risks of investing and trading Axis Gold Fund?
The benchmark for Axis Gold Fund is the Domestic Price of Gold. By investing in such a fund, you are taking the risk on gold price fluctuations. If the price of gold fluctuates, so will the returns from this fund will change.
Also, since this is fund of (single) fund, the tracking error will surely creep in - although it will be based on end of the day pricing.
Final Thoughts about Axis Gold Fund?
Another Gold Fund or Gold Saving fund offering investments in gold which are similar to the so many different products already available in the market. One can go for investment in this Axis Gold fund if they believe that gold prices will continue to rise and trust Axis fund managers to generate accurate returns on gold prices with minimal tracking error.
See List of All Mutual Fund and NFO Articles here
During NFO period each unit cost Rs. 10 per unit
Minimum investment Rs 5,000 and in multiples of Re 1 afterwards.
No tax benefit will be available in Axis Gold Fund
Mr. Anurag Mittal will be the fund manager for Axis Gold Fund.
Multiple options available for investments in Axis Gold Fund :
Growth Option
Dividend Option - Payout, Reinvestment facilities
Axis Gold Fund Entry Load: Nil
Axis Gold Fund Exit Load: 1% if exit within 1 year
NIL beyond 1 year.
SIP or systematic investment plan? Yes.
Minimum SIP is Rs. 1,000 and in multiples of Re. 1 per month. However, a minimum SIP of 36 months or 3 years is required.
Domestic Price of Gold will be the benchmark for tracking the performance of Axis Gold Fund
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