Top-10 fund schemes return over 25% each In 1 year as Sensex loses about 50%…
A touch of gold has done wonders for mutual fund investors in India. Over the past one year, from a group of 925 mutual fund schemes, 10 have given returns of 25% or more. And, these funds are either a gold exchange-traded fund (ETF) or a gilt scheme. Among the top five, four are gold ETFs and one is a gilt fund. Compared to positive returns from gold ETFs and gilt funds, the BSE sensex, the market benchmark, has nearly halved in its value.
In the past one year, Gold BEES, the gold ETF from Benchmark Mutual Fund, has given a return of 30.5% while UTIMF’s gold ETF returned 29.5%. And a fund from Canara Bank MF, that invests in gilts, returned nearly 29%, an analysis of returns on 925 mutual fund schemes available on Bloomberg showed. Nearly 90% of the yearly returns in gold ETFs accrued in the last three months, the data showed.
Compared to such high returns from gold ETFs and gilt schemes, the sensex slid from 17,349 on February 22, 2008, to 8,843 on February 20, 2009, a loss of 49%. And the worst performing mutual fund, among those with a track record of at least a year, is JM’s Small & Midcap Fund with a return of -81.3% (note the negative sign). “With most of the asset classes giving negative returns, investment demand for gold is also rising,’’ said Sanjiv Shah, ED, Benchmark MF. Over the past one year, the total demand for the yellow metal from funds managing gold ETFs globally have increased to over 1,000 tonnes from about 750 tonnes, pointed out Shah, who along with the fund house’s other top official, Rajan Mehta, had in 2003 pioneered the idea of a gold ETF.
Fund managers and industry analysts said the huge spurt in international gold prices was not the only factor responsible for higher returns from Indian gold ETFs. What has also helped is the depreciation of the rupee against the dollar, which aided a 19% appreciation in domestic gold prices over the last three months. This was possible because price of gold in India is linked to international gold price quoted in dollar. On Feb 20, price of gold in Mumbai was at 15,600 per 10 grams, an all-time peak. And, as long as gold prices rise, the chances of making money in gold ETFs, which track the gold prices directly, are also high. However, according to technical analysts, once the equity markets bottom out, the rally in gold is also likely to fizzle out.
