Gold ETFs don't offer SIPs

I would like to invest in gold via Systematic Invest Plan (SIP ). Please name some schemes.

- Ved Prakash

Fund houses like Benchmark, Kotak, Quantum, Reliance, SBI and UTI offer gold exchange-traded funds (Gold ETFs). Such schemes directly invest in physical gold. They are listed on the major stock exchanges and you can buy and sell them just like you do with shares. None of them offer SIPs.

SIP is available in AIG World Gold and DSPBR World Gold. But these funds invest in international funds that buy into stocks of mining companies involved in gold and precious metals.

I am holding 10,000 units of Sundaram BNP Paribas Energy Opportunities Fund and 6,000 units of Tata Indo Global Infrastructure Fund since they were launched. Do I need to redeem/switch over these funds?

-Babu

Both Sundaram BNP Paribas Energy Opportunities (launched in December 2007) and Tata Indo Global Infrastructure (launched in October 2007) are thematic, close-ended funds. The former invests in shares of energy companies, while the latter invests in both Indian and foreign infrastructure companies.

Investments in thematic funds should only corner a small allocation of your portfolio and never be the core holding. Second, we do not generally advocate close-ended funds, since your money tends to get blocked. Also, we do not suggest investing in new fund offers (NFO) as they do not have a track record and performance history.

If you do not need the money, hold on. Or else, you will have to pay a hefty exit load to redeem your units.

I have taken an SIP in four funds: DSP BlackRock Equity, Fidelity Tax Advantage, Reliance Growth and SBI Magnum Tax Gain. The SIP amount is Rs 2,000 in each fund. Please guide me on whether I have chosen the right funds or not. If not, please suggest some.

-Shivendra M Paancholi

DSPBR Equity is an equity diversified fund, with 5-star rating. Reliance Growth is a 4-star rated equity diversified fund. Both have been good performers over the years.

The other two are tax-saving funds. If your aim is to save tax, then you may invest in these funds. Fidelity Tax Advantage is a 5-star rated fund and Magnum Tax Gain is a 4-star rated fund. Both are worth investing. But invest in any one of them.

My father wants to invest in a fund as will give him assured dividend/interest with low risk. Can you advise on any fund/ instrument?

-Sudhanshu

Mutual funds do not come with assured return or no risk tag. For low risk, you may invest in debt funds like Fortis Flexi Debt or JM Money Manager Super. If you can bear a little more risk, then you may also opt for monthly income funds. They don't give monthly income but do carry monthly dividend plans, which can fulfill your need. But, mind you, there is nothing assured here.

I wish to invest in a fund which has both gold and equity. Can you suggest one which invests an equal amount in both? Can you furnish details such as past performance, ratings and risk/return profile?

-Pruthvi

There is just one fund that does so. UTI Wealth Builder Series II was launched in November 2008. The fund invests up to 35 per cent of its assets in UTI's gold exchange-traded fund (gold ETF). The fund's equity exposure can vary between 65 and 100 per cent. It is just about a year old.

Value Research