Equity Fund with a Golden Touch
Sundaram Mutual Fund is planning to launch Equity, Gold-ETF & Debt combination hybrid fund named "Sundaram Equity Plus" on 4th May 2011. NFO closes on 16th May 2011.
It will invest primarily in equity and 35% in Gold ETFs (Exchange Traded Fund). Minimum allocation in Gold-ETF will be 15%.
Earlier UTI Mutual Fund launched UTI Wealth Builder Series II with the same Equity, Debt & Gold ETF combination. Wealth Builder Series II was launched in November 2008.
As on 31st March 2011 the portfolio has allocated 81.17% in Equity, 17.03% in Gold ETF and 1.8% in Debt. It has an AUM (Asset Under Management) of Rs.555.88 crs.
Performance of UTI Wealth Builder Series II:
The fund has outperformed Nifty in one and two year period. Even the fund has downside protection in Year to date (YTD) trailing returns.
What we infer is that the risk capacity of the fund is of a balanced fund with 65% - 100% Equity and remaining in debt. Whether Gold- ETF adds any boost to the portfolio is yet to be tested as the fund goes through the ups and downs of the market.
Does Sundaram Equity Plus adds any value to your portfolio?
1. As per the product details provided by Sundaram Mutual Three year rolling return from Jan. 2001 till March 2011, there is "no negative" returns in Gold Commodity Index, so a sample portfolio of 65% Nifty index and 35% Gold Commodity index has also "no negative" returns period. Downside risk is less and more returns can be generated than Gold Commodity Index.
2. Equity + Gold is a risky combination. So conservative investors looking for protection of capital should stay away.
3. As per the product note 87% of times sample portfolio has generated double digit returns when compared to 73% for Nifty.
4. As per the Key Information Memorandum of NFO, Equity portfolio will be more of largecap with a maximum of 30 stocks.
5. As per the back test, returns of sample portfolio is between Nifty Index and Gold Commodity Index. So the fund will try to outperform Nifty.
6. As the fund invests minimum 65% in Equities so there is benefit of tax free long term capital gains and dividend for the portfolio. Compared to 100% gold fund where the tax rules are same as the debt porfolio.
Investors should wisely decide whether to go for Sundaram Equity Plus NFO.
Do post your queries / suggestions in the comment box.
Performance data has been sourced from valueresearchonline and Sundaram product note.
Sundaram Mutual Fund is planning to launch Equity, Gold-ETF & Debt combination hybrid fund named "Sundaram Equity Plus" on 4th May 2011. NFO closes on 16th May 2011.
It will invest primarily in equity and 35% in Gold ETFs (Exchange Traded Fund). Minimum allocation in Gold-ETF will be 15%.
Earlier UTI Mutual Fund launched UTI Wealth Builder Series II with the same Equity, Debt & Gold ETF combination. Wealth Builder Series II was launched in November 2008.
As on 31st March 2011 the portfolio has allocated 81.17% in Equity, 17.03% in Gold ETF and 1.8% in Debt. It has an AUM (Asset Under Management) of Rs.555.88 crs.
Performance of UTI Wealth Builder Series II:
The fund has outperformed Nifty in one and two year period. Even the fund has downside protection in Year to date (YTD) trailing returns.
What we infer is that the risk capacity of the fund is of a balanced fund with 65% - 100% Equity and remaining in debt. Whether Gold- ETF adds any boost to the portfolio is yet to be tested as the fund goes through the ups and downs of the market.
Does Sundaram Equity Plus adds any value to your portfolio?
1. As per the product details provided by Sundaram Mutual Three year rolling return from Jan. 2001 till March 2011, there is "no negative" returns in Gold Commodity Index, so a sample portfolio of 65% Nifty index and 35% Gold Commodity index has also "no negative" returns period. Downside risk is less and more returns can be generated than Gold Commodity Index.
2. Equity + Gold is a risky combination. So conservative investors looking for protection of capital should stay away.
3. As per the product note 87% of times sample portfolio has generated double digit returns when compared to 73% for Nifty.
4. As per the Key Information Memorandum of NFO, Equity portfolio will be more of largecap with a maximum of 30 stocks.
5. As per the back test, returns of sample portfolio is between Nifty Index and Gold Commodity Index. So the fund will try to outperform Nifty.
6. As the fund invests minimum 65% in Equities so there is benefit of tax free long term capital gains and dividend for the portfolio. Compared to 100% gold fund where the tax rules are same as the debt porfolio.
Investors should wisely decide whether to go for Sundaram Equity Plus NFO.
Do post your queries / suggestions in the comment box.
Performance data has been sourced from valueresearchonline and Sundaram product note.
