How do I invest? Authorized Partcipants Outlook Gold Price Calculation Gold Cash ComponentBloomberg Ticker:REGOLD IN NSE/BSE Symbol: RELGOLD
Positioning of the Fund R* Shares Gold ETF is a passively managed exchange traded fund which endeavors to track and provide similar returns to its benchmark- the domestic prices of gold, through investment in physical gold and money market instruments.
A smart, and easy way to invest in Gold in a demat form. An Investment Opportunity which enables an investor to allocate gold which is considered as a unique asset class which also helps to diversify a portfolio.
- Open-ended exchange traded fund – entry & exit through the stock exchange (NSE/BSE).
- Invests exclusively in physical gold which shall be of fineness( or purity) of 995 parts per 1000 ( 99.5 % ) or higher
- Portfolio focused on providing returns that closely correspond to the returns provided by physical gold.
Benefits of Investing in R* Shares Gold ETF
- Low cost : When you buy R* Shares Gold ETF you have to pay brokerage charges, which is usually much lower than paying for making charges when you buy physical gold.
- Transparency: R* Shares Gold ETF, the rates are transparent as they are traded like a share on the National Stock Exchange / Bombay Stock Exchange and therefore it provides the ability to buy and sell them quickly at the ruling market price and therefore highly liquid. There is no consistency when you buy and sell physical gold across jewellers or banks
- Safety & Security: No concerns about security, theft. Safeguard in the form of electronic mode in the case of unforeseen circumstances.
- Collateral for trading on NSE: R* Shares Gold ETF is accepted as collateral for trading on National Stock Exchange of India Ltd.
- Ability to buy in small units: R* SHARES GOLD ETF one unit is approximately equal to one gram of gold which can be directly bought through the trading terminals.
- No securities transaction tax for trading R* SHARES GOLD ETF on the National Stock Exchange Of India Ltd. Wealth tax is also Nil.
- Feasibility: R* SHARES GOLD ETF units are available on NSE and BSE which provides feasibility to the investor to buy and sell the units during trading hours of the exchange. It enables to limit orders as well as permits intraday trading.
Sector View & Outlook
Gold is used as a store of value and form of currency since times immemorial. Gold has the longest history and has successfully stood the test of time. Gold exhibited a stealer performance during the last decade where it appreciated from Rs. 535 / gram as on 29.04.2002 to Rs. 2865 as on 15.04.2013.
||Gold Price Change (USD)
||Gold Price Change (INR) |
Prices in gold had a recent fall of ~ 7% in a single day (15th April 2013) & corrected by 21% in USD term from all time high. Recent Softening in prices is due to talks that Cyprus which is a part of the European Union is about to sell its gold. However the total quantity of gold held by Cyprus is just 13.9 tonnes an insignificant amount in global context. This leads to some technical unwinding among many of the market participants like hedge funds.
Moreover everywhere else central banks are still on a buying spree and this makes the new level more lucrative to add more gold to their reserves, as in the last year central banks have bought the highest quantity of Gold in the last 48 years.
Central Banks bought more than 145 tonnes in the fourth quarter of 2012. Central bank buying for 2012 rose by 17% over 2011 to sum 534.6 tonnes.
China & Russia have been the largest purchaser of Gold in the last decade has only 1.7% & 9.5% of Gold as a percentage to their Treasuries respectively. As compare to Countries like U.S & Germany which has ~75% of Gold as a percentage to their Treasury. Gold production per year is expected to be around 2800 tonnes per year which will barely fulfill the demand of Central Bank & individual consumers.
In 2008, central banks stopped selling gold and began buying. Of the total, 58% of gold reserves were held by US and EU central banks and 2.6% by Asian central banks. “If Asian Central banks increase their gold reserves to 15% they would require more than 15,000 tonnes of gold. This will lead to a spike in demand for gold as the annual production is only 2,800 tonnes.
Outlook by Central Banks on Gold
Sri Lanka’s Central Bank Governor said lower prices are an opportunity for nations to raise gold reserve. The Bank of Korea said the plunge isn’t a big concern because holding the metal is a part of long-term strategy for diversifying currency reserve.
Demand supply dynamics hints towards higher gold prices. Demand will likely continue to move higher but no major additional supply is expected over foreseeable future. Central bankers used to sell around 400-500 tons, now they buy around 400-500 tons. This swing of around 800-900 tons is a major factor because the new gold supply per annum is only around 2650 to 2850 tons.
Low Growth regime is expected to continue across globally.IMF (International Monetary Fund) has reduced the global growth rate to 3.3% from its earlier projection of 3.5%. Moreover USA & Japan are showing signs of significant improvement.
The two likely scenarios spanning out of current policy measures are –first, where we will neither have growth nor inflation and second, where we will see good growth with higher inflation expectation. The tug-of-war between proponents of inflation and deflation may likely continue. Gold tends to significantly appreciated during high inflationary environment and may likely outperform other assets during deflationary environment as financial stress in the system snowball and inventors scouts for assets without credit or counter party risk - gold.
One of the tenets of portfolio theory is that, over the long run, a well balanced asset allocation increases a portfolio’s risk adjusted returns. Hence one should after discussing his financial goals & risk return appetite with his Financial Advisor allocate an appropriate allocation among different asset classes. Historically gold can be considered as a good diversification tool.
Gold prices have corrected significantly and it seems to be an ideal time to invest in gold. Prospective buyers remain upbeat, as the upcoming marriage and festival season along with Akshaya trithiya hint at higher gold demand from Indian investors.
Common Source: Bloomberg, Reuters and World Gold Council
Portfolio & Scheme Features As on 30th April, 2013
| Asset Allocation as on 30th April, 2013 |
|Gold 995 1 KG BAR
|Cash and Other Receivables
| Scheme Features: |
||The investment objective is to seek to provide returns that closely correspond to returns provided by price of gold through investment in physical Gold (and Gold related securities as permitted by Regulators from time to time). However, performance of the scheme may differ from that of the domestic prices of Gold due to expenses and or other related factors. However, there can be no assurance that the investment objective of the scheme will be achieved. |
||November 22, 2007 |
|Minimum Investment |
|On the Exchange: :Any investor eligible to trade on the exchange can buy minimum one unit of R* Shares Gold ETF which is approximately equal to 1 gram of gold on NSE/BSE. Minimum investment in ETF in secondary markets is one unit representing approximately one gram of gold in the beginning and the weight of gold representing 1 unit keeps reducing to the extent of expenses. |
|Through the AMC: Purchases directly from the Mutual Fund is restricted to Authorized Participants as appointed by the AMC provided the value of units to be purchased is in creation unit size of 1000 units and cash component if any. In addition to authorized participant(s) Reliance Gold Savings Fund can also buy / sell the units from the fund in Creation Unit Size. |
|Load Structure |
|Entry Load* : Not Applicable|
*In terms of SEBI circular no. SEBI/IMD/CIR No.4/ 168230/09 dated June 30, 2009, no entry load will be charged by the Scheme to the investor effective August 1, 2009. Upfront commission shall be paid directly by the investor to the AMFI registered Distributors based on the investors' assessment of various factors including the service rendered by the distributor
|Exit Load: Nil |
|Purity of Gold
||All gold bullion held in the scheme's allocated account with the custodian shall be of fineness (or purity) of 995 parts per 1000 (99.5%) or higher |
||As there are no indices catering to the gold sector/securities linked to Gold, currently R* Shares Gold ETF is benchmarked against the price of Gold |
||Hiren Chandaria |
||2926 Cr.(as on 31 March,2013) |
How to invest
The units of the fund are currently available on National Stock Exchange Of India Ltd (NSE) and Bombay Stock Exchange Ltd (BSE). An investor can directly buy and sell the units of scheme through the broker associated with NSE/BSE and he would receive the units in his demat account on a T+2 rolling settlement
|NSE Code/BSE Scrip Id
|Pricing (per unit)
||One unit= Approx one gram of gold |
||•On the Exchange: One unit |
•Through the AMC(only for Authorised Participants as appointed by the AMC) : 1000 units
Disclaimer The views expressed herein constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. This information is meant for general reading purposes only and is not meant to serve as a professional guide for the readers. Certain factual and statistical (both historical and projected) industry and market data and other information was obtained by RCAM from independent, third-party sources that it deems to be reliable, some of which have been cited above. However, RCAM has not independently verified any of such data or other information, or the reasonableness of the assumptions upon which such data and other information was based, and there can be no assurance as to the accuracy of such data and other information. Further, many of the statements and assertions contained in these materials reflect the belief of RCAM, which belief may be based in whole or in part on such data and other information.
The Sponsor, the Investment Manager, the Trustee or any of their respective directors, employees, affiliates or representatives do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and opinions given are fair and reasonable. This information is not intended to be an offer or solicitation for the purchase or sale of any financial product or instrument. Recipients of this information should rely on information/data arising out of their own investigations. Readers are advised to seek independent professional advice, verify the contents and arrive at an informed investment decision before making any investments.
None of the Sponsor, the Investment Manager, the Trustee, their respective directors, employees, affiliates or representatives shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profits arising in any way from the information contained in this material.
The Sponsor, the Investment Manager, the Trustee, any of their respective directors, employees including the fund managers, affiliates, representatives including persons involved in the preparation or issuance of this material may from time to time, have long or short positions in, and buy or sell the securities thereof, of company(ies) / specific economic sectors mentioned herein.
It is to be distinctively understood that the permission given by the NSE should not in any way be deemed or construed that the Scheme Information Document has been cleared or approved by NSE nor does it certify the correctness or completeness of any of the contents of Scheme Information Document. The investors are advised to refer to the Scheme Information Document for the full text of Disclaimer Clause of NSE.
It is to be distinctly understood that the permission given by BSE Ltd. should not in any way be deemed or construed that the SID has been cleared or approved by BSE Ltd. nor does it certify the correctness or completeness of any of the contents of the SID. The investors are advised to refer to the SID for the full text of the Disclaimer clause of the BSE Ltd.
Scheme specific Risk Factors: The scheme invests in physical gold (bullion) and the risks associated with the bullion are applicable. Some of the key factors affecting gold prices are Central banks’ sale, Producer mining interest, Macro-economic factors, Geo political issues, Seasonal demand, Change in duties & levies. Please refer SID for detail scheme Specific risk factor
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.