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Kotak Mutual fund launched Kotak Gold Fund:

Kotak Mutual Fund launched Kotak Gold Fund

Author:

paressh

After Reliance mutual funds ,its now turn of Kotak mutual fund to launch a Gold Fund.It is essentially a Fund Of Fund scheme which  invests in units of Kotak Gold ETF,which in turn invests in certified physical gold.

.A number of factors affects the gold prices,,most in general are inflation,Dollar index,geopolitical situations etc.Gold is considered as a hedge against inflation.and with rise in inflation investment managers turns towards Gold and silver. Also in general,it has negative correlation with Dollar index.Also geopolitical situations impact gold prices instantaneouly and confirms its safe heaven status…so common people are also showing interest in Gold as an investment option.

Currently,there are different options for investors to invest in this safe heaven commodity.Most of the investors prefer to buy Gold in physical way.In India it is a symbol of prosperity,,but it has certain disadvantages like safekeeping,purity etc…Next to this Gold can be traded at exchanges like Multi-commodity exchange(MCX),Indian Commodity Exchange(ICEX),National Spot Exchange Ltd.(NSEL).But these are useful mostly for trading with short term perspective only.Gold ETFs have emerged as a good option for investors to buy Gold in Demat form and can be hold for unlimited time.But there is a very less volume for these funds as investors need a Demat account or do not have expertise to trade in such funds with right way.

Kotak Gold Fund supercedes the limitations of Gold ETFs.First of all there is no need of Demat account.Conservative investors can invest in systematic way and can be benefited with volatility of this commodity.

Kotak Gold new fund offer will start from 4th March and will be end on 18th March.Scheme has a exit load of 2% for redemption of units within 6 months and 1% if redeemed within 6months to 1 yr.There will be no entry load in this scheme.

Expense ratio prescribed for this fund is maximum 1.50% It means that there is a possible error of 2%  returns of this fund from returns that offered by physical Gold.But facility of SIP(Systematic investing) offers more value to this fund and offers investors to invest in long term basis.

Article Source: http://www.articlesbase.com/investing-articles/kotak-mutual-fund-launched-kotak-gold-fund-4343684.html

About the Author

Name :Paresh.

website:saving-ideas.com

Systematic investing Vs Value averaging:

Syetematic Investment:

Currently this is the most favorable mode of investment.There is no need to time the market.Even if market slides down,investor get advantage of lower unit values for further installments and if market goes upward investor have a option to book profit of paid installments and continue further installments.Data shows that SIP is more useful in falling market.In 2008,when market slides in 2008,lakhs of folios closed as most of investors do not understand the basic concept of Sips.

Limitation of SIPs is that we can get some installments absolutely at higher levels.

Value Averaging:

Value averaging involves addition of capital after a fixed, predefined market levels.

Suppose a investor wants to invest Rs. 5L in mutual Funds.He will invest Rs.1Lac at current market price and add 1lac on each correction of 10% ,,under this concept.

Limitation of concept is that we have assumed that market will slide in future and I will add more on each slide. It requires more market understanding which most of the investors do not have.

So,which mode is correct?

Ideal Investor should use combination of both SIPs as well Value Averaging.

In 2008,when market slides at lower levels,we were advised to our clients value averaging from 10000 sensex level.Most of the clients agreed and get the fruitful results.

Which option to select while Investing in mutual funds: Growth,Dividend Payout orDividend reinvestment:

While distributing mutual funds, whenever I come across a new clinet,,,a definite question arises from him..What is dividend and which option should I select ,what is difference in redemption and dividend payout,where is difference in Growth option and Dividend reinvestment??

 Basically,Dividend is considered as profit distributed by mutual funds to its investors.so after dividend is distributed NAV of scheme is falls by same amount

It doesn’t mean that each and every client is in profit at that time.

 Options available for Investors:

1.Growth Option:In this option,no dividend is payable.

This option is for those investors who wants to remain invested for long term.

 2.Dividend payout  :  Dividend is paid to investor time to time when declared by fund.

As stated above,NAV of fund falls by same amount as dividens.Advantage is that dividend received is completely tax free.In case of ELSS scheme.one need not  to wait for completion of 3 yrs and gets back part of investment.Also he is free to invest once again as per his convenience.

 3. Dividend Reinvestment: Dividend paid is reinvestment in same or different scheme of same mutual fund. Some mutual funds allow investing dividend in other equity fund, subject to criteria of minimum investment is fulfilled.It is meaningless to reinvest dividend in same scheme except ELSS where one can claim tax benefit u/s.80c for dividend reinvested.

So identify your needs,purpose and choose option convenient to you.

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Information provided on this blog is for general purpose only & not investment advice.Please take advice of SEBI Registered Investment Advisors before taking any investment decision.
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