Mutual fund returns

I was having a quick look at the mutual fund returns ( by category of mutual funds, as on 14th aug 2012 ) over the last 3 years / 5 years.

The sensex has fared pretty bad over both the time periods i.e 3 and 5 year time line , when compared to the average returns of various fund categories.

The following are the charts for 5 year and 3 year returns from various MF categories (source valueresearchonline ). The charts show the category average,best, worst returns over the time period.

Surprisingly gold funds turn out to be the toppers in the 5 year category. Is it the time for return reversal in gold and equity? Time only would tell.

Buying gold jewellery - Does it multiply money?

I had to visit a gold store located in the busy business district of Chennai last weekend. After reading some pink paper reports about  'diminishing' interest of retail demand in gold, I expected the shop to be crowd free.

The reality was much different. I felt like, I was entering a crowded vegetable market ( The building was real big with 5 floors and some roughly some 3000/4000 sqft on each floor). As we had to got to the third floor, me and my wife  went towards the lift lobby area. There were around 50 people waiting for the lift and we  got to grab some  foot space on the lift after 15 minutes of waiting.

Third floor , our shopping destination, was crowded as well (with 80% space occupied on the floor by the fairer sex cutting across all economic classes from middle class to the uber rich ).  It took us a  few  minutes to spot the counter where we could find the range of  jewellery that we wanted.

The counter was busy with around 10 customers busily shopping for jewellery. We got the attention from the salesman after waiting for around 20 minutes. The shopping was done fairly in around 5 minutes. When the item was billed, it looked something like this

Item xx 20 gm

22 ct gold rate 2805

20 * 2805 = 56100

Wastage+ making charge + vat was around  6000 . So, the total amount of the bill was around 62,100.

As per the custom of the shop!, we showed our  proforma bill to one of  the guys roaming around the floor in white shirt. He gave us a discount of Rs 500. ( only god knows, what the basis of discount was and what happens to those folks who are ignorant of this custom!).

When we paid and packed out bags, my wife told me that 'gold' (read ' jewellery ' in between :-)) is indeed a great investment ( sarcastically pointing out to my equity portfolio). I also was reminded that the jewel we got last year @ 2640 per gram in the same shop was worth  2805 per gram! now. ( 165 per gm profit!!! yahooooo)

But when I made a back of the paper calculation to show that we have lost some money from last year's purchase and some real interest worth a few more thousand, my wife agreed . ( For those who need explanation, if we had bought 20 gms last year the bill would have been 57800 =52800 (20*2640) + 5000 ( 5000 for wastage+ making charge+vat- custom discount. The jeweller would buy back the 20 gm jewel now for 56100 only ( 2805*20). So, the real loss is    57800 - 56100 + interest lost on the original amount).

Now, coming back to the question of the post "Buying gold jewellery - Does it multiply money?" . The answer is definitely YES . It multiplies the gold jewellers money multi fold. That too when the shop is crowded like a vegetable market, no doubt about that. :-)

If you ask me whether it makes the buyer rich, I have no answers. The maximum I can say is 'It depends :-)'

Note:- The aforesaid jeweller has been  opening up branches aggressively across cities with oodles of  money made by selling gold jewellery!.

E-gold investment

Gold has been one of the favourite place of many Indians to park money. Jewellery, Gold coins are the traditional methods. Gold ETF made it possible to hold dematerised form of gold in demat accounts. For those who didnt have the demat account, mutual funds came to rescue with gold funds ( non ETF ).

For those who believe in might of gold , NSEL provides another way to hold gold in an e-form.

NSEL enables investors to invest in popular commodities like Gold, Silver & Platinum and hold them in Demat form. Investors can buy, hold, sell and also convert them into physical delivery.

NSEL's porfolio extend beyonds gold into silver,platinum,zinc, copper ,etc. So, for those who  understand investing in these commodities NSEL makes them trade/hold them in electronic form.

You may check National Spot Exchange Limited's site for more information. You may find the FAQ page on the  site useful to know more details.


Please note :- This is an FYI / educational post and not a recommendation to invest in any commodity or any other investment through NSEL.

Buying gold on Akshaya tritiya

Remember our article published last akshaya tritiya ?? -http://ideasmoney.blogspot.com/2007/04/akshaya-tritya-and-gold.html

if you had invested in gold ETF during last akshaya tritiya, you would have made a neat 25% (approx.) by this akshaya tritiya.

You would have got similar increase even if you had bought ornaments, but the cost of storage, resale value , etc brings down the ROI .

What are you waiting for??? Start your Gold ETF purchase this akshaya tritiya!!

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Jump start of a gold fund

When there is so much happening in the equity market, there has been a silent roof shooter.

DSPML World Gold Fund-G which was launched in August 2007 has started of with flying colours.

Latest NAV

12.8327 (01/10/07)

Return Since Launch 28.33 * source - value research.

Gold as an investment has always managed to beat inflation. This investment jump start has been on par with an equity performance!!!

May be this is a shorter time to compare..So. Let's wait and watch.

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Akshaya Tritya and Gold

Akshaya Tritiya is around the corner and traditionally it is considered an auspicious day to accumulate wealth like gold (assumed anything purchased that day will multiply). But why not consider the gold mutual funds option this year.

Why gold mutual fund?

You will spend on locker charges to safeguard the gold ornaments but you needn't spend even a penny to safeguard your investment in the fund. The craze for the new jewellery will remain only for some time, then it becomes old-fashioned. It is never so with the fund. You may think the value of your gold has increased over a period...but it is always going to be a notional gain and not a real gain.because most of us will never sell gold. (Even if you happen to sell your old jewellery, you will not opt for cash. Rather you will exchange it for a new design) It’s easy to sell the mutual fund units, without any sentiment attached to it.. So, buy gold the mutual fund way this akshaya tritiya (or any day for that matter) and watch your money really grow (No more notional profits ).

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Gold as an Investment

Buying and Storing gold (in the form of jewels) is a household norm in India. Most of the Invaders came to India for the lure of gold.

Gold as an Investment normally keeps us to keep up with inflation or out phase it at times.

2006 was a golden year in the sense that the ROI on gold even out phased the growth of sensex. (See details below).

ROI * for year 2006
Gold - 48.47%
Sensex - 42.3%

With Mutual funds planning to offer Gold ETFs (Mutual funds that invest in gold), it will be interesting to see how gold enters the Indian household in a different form.

Lets discuss more on gold as an investment in the forthcoming articles.

*Returns are for the period Dec 13, 2005 till Dec 13, 2006 ( Source – Rediff)