| SBI Gold Fund
Gold - A wealth creator
For centuries, gold has been considered a symbol of security & prosperity. Indians buy or present gold extensively on important occasions, be it a wedding or some religious festival. It is considered to be one of the safest forms of storing wealth. These aspects of Indian culture has made India the world's largest consumer of gold (source: World Gold Council). Gold is considered as a safe haven for the future as it is valued as a savings vehicle and is one of the preferred investment avenues.
Why invest in gold?
Safe Haven:
Gold is considered as one of the most pure, safe and secure form of storing wealth. Infact, Gold can also be used as a mortgage against a loan or can be sold to sail through uncertain times.
Consistent asset class:
Gold as an investment asset has given positive returns (in USD) for each calendar year during the last decade outpacing most of asset classes.
Hedge against other asset class:
Gold, as an asset class has low correlation with other asset classes like equity and bonds. It has low correlation with economic downturn in volatile times and is a good hedge against inflation. Coupled with strong appreciation for over a decade, Gold has emerged as an important asset class for investments in one's portfolio.
Diversification:
Easy and convenient way to diversify one's portfolio. Asset Allocation: Units of SBI GETS – 95% to 100%, Reverse repo and /or CBLO and/or short-term fixed deposits and/or Schemes which invest predominantly in the money market securities or Liquid Schemes*- 0 to 5%,
Type of Scheme: An open ended fund of fund scheme
Investment Objective: The investment objective of the Scheme is to seek to provide returns that closely correspond to returns provided by SBI Gold Exchange Traded Scheme (SBI GETS).
SIP in Gold
SBI Gold Fund enables you to invest in gold through Systematic Investment Plan (SIP), thus inculcating a regular savings habit to your investments. This ensures that you can reap the benefits of investing in gold through a small but regular amount. The following table shows the SIP returns in Gold for the past 10 years. It is seen that Gold has displayed a consistency in performance.
| Period | 1 Year | 3 Years | 5 Years | 7 Years | 10 Years | | Amount Invested | 60,000 | 180,000 | 300,000 | 420,000 | 600,000 | | SIP Start Date | 01/08/2010 | 01/08/2008 | 01/08/2006 | 01/08/2004 | 01/08/2001 | | Gold Price (Rs/Gm) (As on July 29, 2011) | 2292.98 | 2292.98 | 2292.98 | 2292.98 | 2292.98 | | Total no. of units accumulated | 30 | 110.98 | 233.55 | 411.97 | 767.04 | | Investment value (as on July 29, 2011) in Rs. | 68,797.16 | 254,483.35 | 535,535.46 | 944,640.43 | 1,758,806.03 | | Returns on SIP in Gold (%) | 28.63% | 23.94% | 23.44% | 22.80% | 20.41% | Source: Bloomberg. Past Performance may or may not be sustained in future. Source: Bloomberg. Returns are as on 29/07/2011 with SIP being done on 1st of every month. Returns are CAGR & have been calculated for cash flows at different point of time using XIRR function in excel spreadsheet for LBMA AM Fix closing prices converted into INR. Past performance may or may not be sustained in the future.
Introducing SBI Gold Fund
SBI Gold Fund is an open ended Fund of Fund (FOF) scheme that invests predominantly in the units of SBI Gold Exchange Traded Scheme (SBI GETS). The scheme seeks to provide returns that closely correspond to returns provided by SBI Gold Exchange Traded Scheme (SBI GETS). You can invest in SBI Gold Fund just like any other mutual fund scheme without the hassles of opening a demat account, providing you an opportunity to take exposure into Gold as an asset class, in a convenient way.
SBI Gold Fund Benefits
No need to hold or open a DEMAT account: SBI Gold fund provides an opportunity for the investor, to take exposure into Gold as an asset class, in smaller and convenient investment amount without having a demat account.
Systematic Investment Plan (SIP): It is a long term disciplined investment technique which provides a systematic way of investing in Gold. This allows you to save and invest regularly without 'timing the markets'.
Liquidity: An investor can subscribe and redeem gold fund on all business days.
Cost Effective: Investing in gold through the SBI Gold Fund in physical application mode enables you to invest in a low cost manner as the investor does not have to incur expenses like annual maintenance charges for demat account , delivery /brokerages charges or transaction charges incurred for investing through the dematerialized mode. However, investors will be bearing the recurring expenses of the scheme, in addition to the expenses of the underlying Scheme.>
Tax Benefits: SBI Gold Fund is treated as a non equity product from tax perspective. It enables an investor to claim long term capital gains tax after a period of one year of investments, whereas for physical gold long term taxation is available after 3 years.
Convenience of investing: Investing in gold through SBI Gold Fund is easy - investors can directly subscribe units through at the various designated investor service centre across the country thereby making it easily accessible and convenient.
Assured Purity & Security: SBI Gold Fund would invest in units of SBI Gold Exchange Trade Scheme (SBI GETS) and all gold bullion held in SBI GETS shall be of fineness of 995 parts per 1000 and it will be held safe with the custodian.
Availability of add on facility: The fund allows investors to avail add-on facilities like systematic transfer plan, systematic investment plan and systematic withdrawal plan.
Comparision of SBI Gold Fund with other gold instrument
| Benefit | Physical Gold | Commodity Exchg. | Gold ETF | SBI Gold Fund | | Good control on quality of gold | No | Yes | Yes | Yes | | Lower cost of holding | Yes | Hi Brokerage Cost | Yes | Yes | | Risk of theft | Yes | No | No | No | | Availability in smaller denomination | Yes | Yes | Yes | Yes | | Wealth Tax | Yes | No | No | No | | Long term investment | Yes | Speculation or Trading | Yes | Yes | | Long term capital gain tax | After 3 years | No | After 1 year | After 1 year | | Auto SIP facility | No | No | No | Yes | | Fragment holdings | Yes | No | No | Yes | | Purchase price | Dealer price | Stock exchange price | Stock exchange price | NAV related price | Fund Facts
Benchmark
The Scheme's performance will be benchmarked against the price of physical gold. As there are no indices catering to the gold sector or securities linked to the Gold, currently SBI Gold Fund shall be benchmarked against the domestic price of gold. The price here refers to the morning fixing of Gold by London Bullion Market association (LBMA).
Fund Manager
Raviprakash Sharma
Plans and Options
Growth and Dividend Plan (with both payout and reinvestment options)
Min. investment size initial purchase
Rs. 5000/- and in multiples of Re. 1 thereof & Additional purchase: Rs. 1000/- and in multiples of Re. 1 thereof
We are enclosing herewith for your reference.
1. Comparision Gold v/s. other Investments
2. Frequently Asked Questions (FAQ)
For More details, clarification & forms, Contact us.
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Nikhil Vadia : 98197 55658 | 
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