HDFC Asset Management Co. Ltd is the Asset Management company for HDFC gold Fund. It was incorporated in 1999, and was approved to act as an Asset Management Company for the HDFC Mutual Fund by SEBI. In terms of the Investment Management Agreement, the Trustee has appointed the HDFC Asset Management Company Limited to manage the Mutual Fund also. The paid up capital of the AMC is Rs. 25.169 crore. The shareholding pattern is Housing Development Finance Corporation Limited 59.98%, Standard Life Investments Limited 39.99% & Other Shareholders 0.03%. The AMC also provides portfolio management / advisory services and activities are not in conflict with those of the Mutual Fund.
HDFC Gold ETF Review of Investment Objective
The investment objective of the Scheme is to generate returns that are in line with the performance of gold, subject to tracking errors. The Scheme also may engage in gold lending, and /or deposit gold with banks in return for fees as and when permitted by SEBI. The Scheme will also invest in debt and money market securities in order to meet the liquidity requirements.Options Available – Only growth option is available and there is no dividend option applicable.
HDFC Gold ETF Details
Launch Date – 16th August 2010
NSE Symbol – HGETF
Average AUM for the quarter ended June 30, 2011 – Rs.29,850.81 (In Lakhs)
Entry Load & Exit Load – Nil
Expense Ratio – 1%
Asset Management Company – HDFC Asset Management Company Ltd.
Trustee Company – HDFC Trustee Company Ltd.
Custodian – Bank of Nova Scotia.
Fund Manager – Mr. Anil Bamboli
Gold bullion 100% Maximum; 90% Minimum
Debt Securities and Money Market Instruments – 10% Maximum & 0% Minimum.
Investments in gold bullion would be primarily assessed with regard to its fineness. Every investment opportunity in Debt Securities and Money Market Instruments would be assessed with regard to credit risk, interest rate risk and liquidity risk.
HDFC Gold ETF Units and Minimum investment
Each unit of HGETF will be issued at a face value of Rs.100 plus any premium. Each unit will be equal to approximately one gram of gold. An investor has to invest a minimum of Rs.5000 and for additional purchase on an ongoing basis one can add more in multiples of Rs.1000.
How to Purchase HDFC Gold ETF
The units of the scheme will be available in dematerialised form. Investors need to have a beneficiary account with a Depository Participant of NSDL/ CDSL. The units will be traded in dematerialised form.
Through the Stock Exchange:
Trading HGETF is similar to trading normal securities. If an investor has bought the units, he needs to make payment to the broker. If he has sold the units, he needs to deliver the units to the broker.
Investing in HDFC Gold ETF SIP
SIP is similar to a Recurring Deposit. Every month on a specified date an amount you choose is invested in a mutual fund scheme of your choice. HDFC Gold Fund gives the option of investing through SIP – investing with managed investments ie. investing a set of amount at regular intervals rather than investing a larger lump sum amount in one go. This way, the cost of your investment is averaged over a period of time. One can do this either monthly or on a quarterly basis.
The minimum amount that one can invest via SIP in this gold fund:
- Monthly Option – Rs. 500 and in multiples of Rs. 100 and
- Quarterly Option – Rs. 1500 and in multiples of Rs. 100.
Advantages of HDFC Gold Fund
- It enables Investing in gold via SIP on a monthly/ quarterly basis.
- There is no need of demat account which is mandatory for other gold ETFs.
- It also gives the option of STP & SWAP.
- This fund offers great liquidity option compared with the physical gold or any other form of gold.
- Purity of gold is guaranteed.
HDFC Gold ETF Verdict
HDFC Gold ETF along with Kotak and Gold Bees are one of the best gold etfs to invest in India and provide a sharp contrast to the worst ETFs like SBI and Axis Bank.HDFC Gold ETF has the added advantage of being one of the largest Fund Houses and is a subsidiary of one of the largest private banks with a great distribution strenght and reputation.It is also one of the few mutual fund ocmpanies which is offering a SIP on the Gold ETF unlike many others.Expense Ratio is also one of the lowest in the industry at 1% . All in all HDFC Gold ETF is a good buy if you are thinking of putting money in gold through ETF.
Read about other Gold ETFs in India