Tata Mutual Fund on Tuesday, January 2, announced the launch of four new fund offers (NFOs). While Tata Gold ETF and Tata Silver ETF will be available till January 9, Tata Gold ETF Fund of Fund and Tata Silver ETF Fund of Fund will be there till January 16. All the funds are open-ended in nature.
The fund manager for all the NFOs is Tapan Patel.
Here's all you need to know about these NFOs:
This is an
exchange-traded fund (ETF) replicating/tracking the domestic price of gold. The scheme will re-open on or before January 17, 2024.
The investment objective of the fund is to generate returns that are in line with the performance of physical gold in domestic prices, subject to tracking error. However, there is no assurance or guarantee that the investment objective of the scheme will be achieved, the fund house said.
The benchmark is the domestic price of gold and there are no available entry and exit loads.
The minimum investment amount, allowed during the NFO period, is ₹100 and in multiple of ₹1 thereafter.
Tata Gold ETF Fund of Fund
This is an open-ended fund of fund scheme investing in the Tata Gold Exchange Traded Fund.
This scheme will re-open on or before January 24, 2024.
The investment objective of the scheme is to provide returns that are in line with returns provided by the
Tata Gold Exchange Traded Fund. However, there is no assurance or guarantee that the investment objective of the scheme will be achieved, the fund house said.
The fund manager for this scheme is Tapan Patel and the benchmark is the domestic price of gold.
There is no entry and exit load attached to the scheme.
The minimum investment amount, available during NFO, is ₹5,000 and in multiple of ₹1 thereafter.
There is an entry load attached to the NFO.
Regarding exit loads:
For redemption, switch-out, systematic withdrawal plan (SWP), or systematic transfer plan (STP) carried out within 365 days from the date of allotment: If the withdrawal or switched-out amount does not exceed 12% of the initial investment cost, there is no exit load.
However, if the withdrawal or switched-out amount surpasses 12% of the original investment cost, a 1% exit load applies.
For redemption, switch-out, SWP, or STP executed after 365 days from the date of allotment, no exit load is applicable.
A look at existing gold ETFs
| S.No. | Gold ETF in India |
| 1. | HDFC Gold ETF |
| 2. | SBI Gold ETF |
| 3. | IDBI Gold ETF |
| 4. | Axis Gold ETF |
| 5. | Kotak Gold ETF |
| 6. | Aditya Birla Sun Life Gold ETF |
| 7. | Nippon India Gold ETF |
| 8. | Invesco India Gold ETF |
| 9. | Quantum Gold ETF |
| 10. | UTI Gold ETF |
| 11. | ICICI Prudential Gold ETF |
Tata Silver Exchange Traded Fund
The investment objective of the fund is to generate returns that are in line with the performance of physical silver in domestic prices, subject to tracking error. However, there is no assurance or guarantee that the investment objective of the scheme will be achieved, the fund house said.
The benchmark is the domestic price of silver.
The minimum investment amount, during the NFO period, is ₹100 and in multiple of ₹1 thereafter.
There are no entry and exit loads attached to the fund.
Tata Silver ETF Fund of Fund
The investment objective of the scheme is to seek to provide returns that are in line with returns provided by the Tata Silver Exchange Traded Fund. However, there is no assurance or guarantee that the investment objective of the scheme will be achieved, the fund house said.
The minimum investment amount, during the NFO period, is ₹5,000 and in multiple of ₹1 thereafter.
There are no entry loads attached to this.
Redemption/switch-out/SWP/STP on or before the expiry of 365 days from the date of allotment: If the withdrawal amount or switched-out amount is not more than 12% of the original cost of investment.
NIL redemption/switch-out/SWP/STP on or before the expiry of 365 days from the date of allotment: If the withdrawal amount or switched-out amount is more than 12% of the original cost of investment - 1%.
Redemption/Switch-out/SWP/STP after expiry of 365 days from the date of allotment – NIL
Investment considerations in these NFOs
Investing in gold and silver aims to offer a strategy for diversification of portfolio and long-term stability. Gold's role as a hedge against currency devaluation, inflation, and market uncertainties, coupled with its scarcity and historical safe-haven status, helps investors to preserve wealth effectively.
Meanwhile, silver's surging demand in industries like EV technology and green energy, amidst a supply shortage, signals potential price appreciation.
As silver is mostly a by-product, its scarcity and expanding industrial uses make it an appealing investment, Tata Mutual Fund house said.
These funds will provide investors an opportunity to take exposure in gold and silver respectively, as an asset class with low transaction costs, high liquidity and low expense ratio, etc.
Anand Vardarajan, Business Head responsible for Institutional Clients, Banking, Alternate Investments, and Product Strategy at Tata Asset Management, highlighted the importance of risk management in investment strategies.
He emphasised that when unfamiliar with risks, diversification is key, while when risks are known, hedging becomes essential.
Vardarajan pointed out that precious metals such as gold and silver serve as effective tools for both diversification and risk mitigation in investment portfolios. He noted their capability to act as hedges against inflation and currency fluctuations.
Additionally, given their distinct correlation with other assets, they offer shelter during market volatility in equities and debts.
He explained the appeal of gold as an asset class, considering its limited supply compared to the amount already in circulation. This scarcity factor, combined with the growing demand, solidifies the case for including gold in investment portfolios.
Regarding silver, he highlighted its diverse utility, ranging from ornamental and decorative purposes to industrial applications. As various emerging industries increasingly use silver, it is recognised as an up-and-coming metal.
Vardarajan concluded that both gold and silver present compelling opportunities for investors, providing a balanced approach by offering diversification and hedging benefits within a portfolio.
However, investors need to weigh several key factors before committing their funds. Understanding the NFO's alignment with their own investment goals and risk tolerance is paramount. Additionally, evaluating the fund manager's track record, experience, and the fund house's reputation is essential to gauge potential performance.
Investors should also review the costs involved, such as the expense ratio and any entry or exit loads. Moreover, considering the market conditions and economic outlook at the time of the NFO launch can be influential in making an informed decision.
First Published: Jan 2, 2024 12:55 PM IST
