HDFC Gold Fund
Oct 12, 2011

Author: PersonalFN Content & Research Team

Summary

An Open ended Fund of Funds Scheme

Type	Open-ended gold fund of fund.	Benchmark Index	Domestic Price of Gold
Min. Investment	Rs 5,000 (for lump sum) and in multiples of Rs 1 thereafter. Rs 500 (for monthly SIP)	Face Value	Rs 10 per unit
Add . Investment:	Rs 1,000	Expense Ratio:	0.75% of daily or average weekly net assets of the scheme
Entry Load	Nil	Exit Load *	2% on redemptions and switches within 6 months from the date of allotment. 1% is payable if units are redeemed / switched-out after 6 months but within 1 year from the date of allotment. No exit loan is payable after one year.
Issue Opens	October 7, 2011	Issue Closes	October 21, 2011

Investment Objective*

The investment objective of the Scheme is to, “seek capital appreciation by investing in units of HDFC Gold Exchange Traded Fund (HGETF).” Though every endeavour will be made to achieve the objective of the Scheme, the AMC / Sponsors / Trustees do not guarantee that the investment objective of the Scheme will be achieved. No guaranteed returns are being offered under the Scheme.

*Source: Scheme Information Document

Is this fund for you?

HDFC Gold Fund (HDFC GF) is the first gold fund of funds scheme from the HDFC Mutual Fund. The fund will invest its corpus in HGETF. The Fund is launched especially considering the requirements of those who want to buy gold in a paper form but do not have a Demat account. Unlike ETFs, you don’t need to maintain any Demat account to invest in HDFC GF. The fund also gives you the flexibility to invest as low as Rs 500 per month through SIP.

The fund is mandated to allocate its assets as under:

Type of Instrument	% of Net Asset	Risk Profile
Units of HGETF	95 % - 100 %	Medium to High
Reverse repo and /or CBLO and / or money market instruments and/or Schemes which invest predominantly in the money market securities or Liquid Schemes.	0 % - 5 %	Low

(Source: Scheme Information Document)

Fund Manager Profile

HDFC GF will be managed by Mr Anil Bamboli who is Grad CWA, MMS (Finance) and holds a bachelors degree in commerce. He also has to his credit, CFA – CFA Institute USA. Prior to joining HDFC mutual fund, Mr. Bamboli was also associated with SBI Funds Management Pvt. Ltd. He has a total work experience of 16 years in Fund Management and Research.

Fund Outlook

Launch of HDFC GF has come at the time when gold prices are near their all time high in India. This may not be the right time to go aggressive on buying gold but it may not be a bad idea either to buy gold periodically in smaller quantities (at PersonalFN, we recommend investors to have at least 5%-10% of their portfolio in Gold.). Moreover, the asset allocation mandate of the fund will bind the fund manager to allocate at least 95% of the assets in HGETF in order to keep the tracking error to the minimum. One should be watchful over any favourable news on macro economic front of developed economies which might prove to be a bearish signal for the current secular gold bull market. However if situation in the west worsens then gold might move further up.

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