- Date : 25/01/2023
- Read: 3 mins
DSP World Gold Fund will now be known as DSP World Global Fund of Funds.
DSP World Gold Fund returned a whopping 33% in the last three months and is now changing course. It will now be called the DSP World Gold Fund of Funds. It is the first scheme in India that invests in a mutual fund overseas that purchases gold-mining company shares. It will now start investing in ETFs, investing gold miner shares.
The fund invested its complete corpus in Blackrock Global Funds – World Gold Fund (BGF), and it will also invest in VanEck Junior Gold Miners ETF, iShares MSCI Global Gold Miners ETF, and VanEck Gold Miners ETF, among others.
It wants to diversify its risk and is a schemed that is managed actively. Investors might get less return than the benchmark. The fund aims to reduce concentration risk by investing in passive schemes. Expenses are mostly lower in passive ETFs than in active ETFs. BGF's expenses are 1.05% of AUM, and ETFs charge 0.5-0.6%.
Also Read: India's top 5 gold ETFs
What The Experts Say
DSP Mutual Fund, Head, Products, and Market Strategist, said that investing in gold mining is tactical as it is a cyclical industry. He said investing in ETFs will help reduce scheme costs, making it a better long-term product. It means that returns will be better with a reduced expense ratio.
Advisory's Chief Ideator, Shyam Shekhar, thinks the move will benefit its investors. The expense ratio reduction amount depends on the fund manager and how they mix between passive and active investment strategies.
Window For Exit
You can exit the scheme without load as the fundamental attributes change. However, it is not mandatory. The window opens February 1 and shuts down on March 2, 2023. Investors who stay will indicate their approval of the changes in the scheme's fundamental attributes.
Also Read: 7 benefits of investing in gold ETFs
What Should Investors Do?
Investors must know about gold mining if they want to invest in it. Gold prices are increasing, and it benefits the miners. We expect the gold prices to increase and provide more profits to miners. Gold miners have healthy balance sheets and aren't in a capital expenditure situation. Valuations will become more attractive as the profits rise.
Financial experts believe gold prices will increase up to Rs. 63,000/10 grams by the end of this year, and the growth will not be linear. However, if the gold prices don't rise, miners might be in for huge losses as the decline is generally steeper. The scheme is only for investors who know about gold and its mining and its associated risks and rewards. Beginners are only advised to invest in it if they have expert advice or knowledge.