STUDENT’S COLLOQUIUM REPORT

GOLD MUTUAL FUND

SUBMITTED TO:

Dr. HIMANI JOSHI

Academic Co-ordinator SUBMITTED BY:

Akash Thakur
Bharat Maheshwari
Dipa Shah
Girish Nair
Nikita Sanghvi
Prakash Prajapati

GROUP NO.: 6

DATE OF SUBMISSION:

26th JAN 2010

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 ACKNOWLEDGEMENT

We extend our warmest thank and appreciation to all people who have assisted us in the preparation
of this report.

We are thankful towards the whole Stevens Business School family for providing the infrastructure
and facilities, without which our project would have not taken a shape.

We are also thankful to Mr. Chetan Shah (LIC Agent) & Mr. B. R. Shah (Rtd. , Manager, SBI) for
their valuable suggestion on the subject and feed back for preparing questionnaire.

We are also grateful to the respondents of our questionnaire who spared their valuable time and
obliged us by giving their co-operation and the information we needed.

We also convey my sincere gratitude to all the authors & websites from where we had collected
meaningful materials.
Last but not the least; we would like to thank our faculty members, Dr. Himani Joshi, Academic Co-
ordinator, and Ms. Neha Saxena for providing us with guidelines, suggestions, feedback &
meaningful insights about the subject of study.

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 LIST OF CONTENTS
Acknowledgement.……………….
…………………………………………………….2

List of Charts ….…….…………….…………….

………………………………………..4

Mutual fund .….……………….……………………….

………………………………….5

Gold Mutual
Fund.........................................................................................12

Players in Gold ETF’s in

India...................................................................16

Performance Analysis Of Mutual Fund Gold Etf ……..

……………...........22

Research Design ……………………….………..

…………………………….....……...26

Findings & Analysis of Data ………..........…...

…………………………………….27

Conclusion..........................................................................................
..............31

Limitation ………………………………………………………….…………..
…………….32
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 Appendix .............................................................................. .............
................33

Reference ...............
……………………………………………………………….………...38

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 LIST OF TABLES and CHARTS
Table/Chart.no. Name of the Table/Chart Page no.

Comparison Of Gold ETF With Physical Gold

1.B.1
15

Gold ETFs In India

2.1 17

2.2 Absolute Returns (In %) As On Jan 22, 2010 18

2.3 Rank As On Jan 22, 2010 19

3.A.1 Performance On The Basis Of NAV(UTI GOLD ETF) 21

3.A.2 Net Assets(Rs. Cr) (UTI GOLD ETF) 21

Relationship Between
3.A.3 UTI GOLD ETF & SENSEX (UTI GOLD ETF) 22

3.B.1 Performance On The Basis Of NAV(Reliance Gold ETF) 24

3.B.2 Net Assets(Rs. Cr) (Reliance Gold ETF) 24

Relationship Between
3.B.3 UTI Gold ETF & SENSEX (Reliance Gold ETF) 25

Number of Respondents
5.A 26

Perception Of People Regarding Investment

5.B 27

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 Factors Influencing Investment
5.C 28

5.D Investment Purpose 28

AMC Preference for Investment

5.E 29

5.F Feature Preference For Mutual Fund Investment 30

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1.INTRODUCTION
1.a. MUTUAL FUND
1.a.1 INTRODUCTION

Mutual fund is a group of investors operating through a fund manager to purchase a diverse
portfolio of stocks or bonds. Mutual funds are highly cost efficient and very easy to invest in. By
pooling money together in a mutual fund, investors can purchase stocks or bonds with much lower
trading costs than if they tried to do it on their own. Also, one doesn't have to figure out which
stocks or bonds to buy. But the biggest advantage of mutual funds is diversification.

Diversification means spreading out money across many different types of investments. When one
investment is down another might be up. Diversification of investment holdings reduces the risk
tremendously.

Mutual Fund is an instrument of investing money. Nowadays, bank rates have fallen down and are
generally below the inflation rate. Therefore, keeping large amounts of money in bank is not a wise
option, as in real terms the value of money decreases over a period of time.

One of the options is to invest the money in stock market. But a common investor is not informed
and competent enough to understand the intricacies of stock market. This is where mutual funds
come to the rescue.

1.a.2 MUTUAL FUND CLASSIFICATION:

On the basis of their structure and objective, mutual funds can be classified into following major
types:

Closed-end funds
A closed-end mutual fund has a set number of shares issued to the public through an initial public
offering.

Open-end funds
Open end funds are operated by a mutual fund house which raises money from shareholders and
invests in a group of assets

Large cap funds

Large cap funds are those mutual funds, which seek capital appreciation by investing primarily in
stocks of large blue chip companies

Mid-cap funds
Mid cap funds are those mutual funds, which invest in small / medium sized companies. As there is
no standard definition classifying companies

Equity funds
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Equity mutual funds are also known as stock mutual funds. Equity mutual funds invest pooled
amounts of money in the stocks of public companies.

Balanced funds
Balanced fund is also known as hybrid fund. It is a type of mutual fund that buys a combination of
common stock, preferred stock, bonds, and short-term bonds

Growth funds
Growth funds are those mutual funds that aim to achieve capital appreciation by investing in growth
stocks.

No load funds
Mutual funds can be classified into two types - Load mutual funds and No-Load mutual funds.

Exchange traded funds

Exchange Traded Funds (ETFs) represent a basket of securities that is traded on an exchange,
similar to a stock. Hence, unlike conventional mutual funds

Value funds
Value funds are those mutual funds that tend to focus on safety rather than growth, and often choose
investments providing dividends as well as capital appreciation.

Money market funds

A money market fund is a mutual fund that invests solely in money market instruments. Money
market instruments are forms of debt that mature in less than one year and are very liquid.

International mutual funds

International mutual funds are those funds that invest in non-domestic securities markets throughout
the world.

Regional mutual funds

Regional mutual fund is a mutual fund that confines itself to investments in securities from a
specified geographical area, usually, the fund's local region.

Sector funds
Sector mutual funds are those mutual funds that restrict their investments to a particular segment or
sector of the economy.

Index funds
An index fund is a a mutual fund or exchange-traded fund) that aims to replicate the movements of
an index of a specific financial market.

Fund of funds
A fund of funds (FoF) is an investment fund that holds a portfolio of other investment funds rather
than investing directly in shares, bonds or other securities.

1.a.3 DIFFERENT PLANS THAT MUTUAL FUNDS OFFER

To cater to different investment needs, Mutual Funds offer various investment options. Some of the
important investment options include:

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Growth Option
Dividend is not paid-out under a Growth Option and the investor realises only the capital
appreciation on the investment (by an increase in NAV).

Dividend Payout Option

Dividends are paid-out to investors under the Dividend Payout Option. However, the NAV of the
mutual fund scheme falls to the extent of the dividend payout.

Dividend Re-investment Option

Here the dividend accrued on mutual funds is automatically re-invested in purchasing additional
units in open-ended funds. In most cases mutual funds offer the investor an option of collecting
dividends or re-investing the same.

Retirement Pension Option

Some schemes are linked with retirement pension. Individuals participate in these options for
themselves, and corporates participate for their employees.

Insurance Option
Certain Mutual Funds offer schemes that provide insurance cover to investors as an added benefit.

Systematic Investment Plan (SIP)

Here the investor is given the option of preparing a pre-determined number of post-dated cheques in
favour of the fund. The investor is allotted units on a predetermined date specified in the offer
document at the applicable NAV.

Systematic Withdrawal Plan (SWP)

As opposed to the Systematic Investment Plan, the Systematic Withdrawal Plan allows the investor
the facility to withdraw a pre-determined amount / units from his fund at a pre-determined interval.
The investor's units will be redeemed at the applicable NAV as on that day

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1.a.4 FREQUENTLY USED TERMS

Net Asset Value (NAV)

Net Asset Value is the market value of the assets of the scheme minus its liabilities. The per unit
NAV is the net asset value of the scheme divided by the number of units outstanding on the
Valuation Date.

Sale Price

It is the price you pay when you invest in a scheme. Also called Offer Price. It may include a sales
load.

Repurchase Price

Is the price at which units under open-ended schemes are repurchased by the Mutual Fund. Such
prices are NAV related.

Redemption Price

Is the price at which close-ended schemes redeem their units on maturity. Such prices are NAV
related.

Sales Load

Is a charge collected by a scheme when it sells the units. Also called, ‘Front-end’ load. Schemes that
do not charge a load are called ‘No Load’ schemes.

Repurchase or ‘Back-end ‘Load

Is a charge collected by a scheme when it buys back the units from the unitholders.
Assets under Management
It is used to gauge how much money a fund is managing. Mutual Funds use this as a measure of
success and comparison against their competitors; in lieu of revenue or total revenue they use total
'assets under management'.

Asset Allocation Fund

A mutual fund that provides investors with a portfolio of a fixed or variable mix of the three main
asset classes - stocks, bonds and cash equivalents - in a variety of securities. Some asset allocation
funds maintain a specific proportion of asset classes over time, while others vary the proportional
composition in response to changes in the economy and investment markets.

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Standard Deviation

Standard deviation is a measure of total risks of a fund. In other words it measures the volatility of
returns of a fund. A higher standard deviation means that the returns of the fund have been more
volatile than a fund having low standard deviation. In other words high standard deviation means
high risk.
Beta
Beta is a statistical measure that shows how sensitive a fund is to market moves. If the Sensex
moves by 25 per cent, a fund's beta number will tell you whether the fund's returns will be more
than this or less. The beta value for an index itself is taken as one. Equity funds can have beta
values, which can be above one, less than one or equal to one.

R-squared
But the problem with beta is that it depends on the index used to calculate it. It can happen that the
index bears no correlation with the movements in the fund. Thus, if beta is calculated for large cap
fund against a mid-cap index, the resulting value will have no meaning. This is because the fund
will not move in tandem with the index. Due to this reason, it is essential to take a look at a
statistical value called R-squared along with beta. The R-squared value shows how reliable the beta
number is. R-squared values range between 0 and 100, where 0 represents the least correlation and
100 represents full correlation. If a fund's beta has an R-squared value that is close to 100, the beta
of the fund should be trusted. On the other hand, an R-squared value that is close to 0 indicates that
the beta is not particularly useful because the fund is being compared against an inappropriate
benchmark.
1.a.5 ADVANTAGES OF MUTUAL FUNDS

The advantages of investing in a Mutual Fund are:

 Professional Management
 Diversification
 Convenient Administration
 Return Potential
 Low Costs
 Liquidity
 Transparency
 Flexibility
 Choice of schemes
 Tax benefits
 Well regulated

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1.a.6 RISK FACTORS OF MUTUAL FUNDS

The Risk-Return Trade-off:

The most important relationship to understand is the risk-return trade-off. Higher the risk greater the
returns/loss and lower the risk lesser the returns/loss.
Hence it is up to you, the investor to decide how much risk you are willing to take. In order to do
this you must first be aware of the different types of risks involved with your investment decision.

Market Risk:
Sometimes prices and yields of all securities rise and fall. Broad outside influences affecting the
market in general lead to this. This is true, may it be big corporations or smaller mid-sized
companies. This is known as Market Risk. A Systematic Investment Plan (“SIP”) that works on the
concept of Rupee Cost Averaging (“RCA”) might help mitigate this risk.

Credit Risk:
The debt servicing ability (may it be interest payments or repayment of principal) of a company
through its cash flows determines the Credit Risk faced by you. This credit risk is measured by
independent rating agencies like CRISIL who rate companies and their paper. A ‘AAA’ rating is
considered the safest whereas a ‘D’ rating is considered poor credit quality. A well-diversified
portfolio might help mitigate this risk.

Inflation Risk:
Inflation is the loss of purchasing power over time. A lot of times people make conservative
investment decisions to protect their capital but end up with a sum of money that can buy less than
what the principal could at the time of the investment. This happens when inflation grows faster
than the return on your investment. A well-diversified portfolio with some investment in equities
might help mitigate this risk.

Interest Rate Risk:

In a free market economy interest rates are difficult if not impossible to predict. Changes in interest
rates affect the prices of bonds as well as equities. If interest rates rise the prices of bonds fall and
vice versa. Equity might be negatively affected as well in a rising interest rate environment.
Political/Government Policy Risk:
Changes in government policy and political decision can change the investment environment. They
can create a favourable environment for investment or vice versa.

Liquidity Risk:
Liquidity risk arises when it becomes difficult to sell the securities that one has purchased. Liquidity
Risk can be partly mitigated by diversification, staggering of maturities as well as internal risk
controls that lean towards purchase of liquid securities.

1.b. GOLD MUTUAL FUND

1.b.1 INTRODUCTION

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Gold Mutual funds - A relatively safe method of buying and owning gold stocks allows the owner
to diversify among many stocks and allows the investing decisions to be made by a professional.
Investment methods vary among funds and provide many different styles of portfolio management
for an investor to choose from. Prices move faster and further in both directions than the price of
gold.

Most mutual fund rating services define gold mutual funds as those having a objective relating to
gold set out in the offering prospectus. Typically included are mutual funds that pursue capital
appreciation by investing primarily in equity securities of companies engaged in the mining,
distribution, or processing of gold and other precious metals. Mutual funds labelled as "gold mutual
funds" are viewed as "specialty funds" because of their portfolio's focus on gold mining stocks,
though some do own small amounts of gold bullion.

Up to 35% of a gold mutual fund's assets may be invested in securities of companies that derive a
portion of their gross revenues, directly or indirectly, from the business of mining, processing,
fabricating, distributing or otherwise dealing in gold, silver, platinum or other natural resources, in
securities of selected growth companies and fixed income securities of any issuers, including U.S.
government securities.

Some gold mutual funds may invest in domestic or foreign companies that have small, medium or
large capitalizations and concentrate their investments by investing at least 25% of its total assets in
Natural Resources Companies. Gold mutual funds often concentrate investments in smaller
companies and foreign securities, with mining and exploration risks of precious metals. So, gold
mutual funds are riskier and more speculative than general, diversified funds.

WHY INVEST IN MUTUAL FUNDS THAT INVEST IN GOLD, RATHER THAN

BULLION?
• Mutual funds can be bought, sold, or exchanged on any day the stock markets are open for
business. Shares of gold mutual funds can be held directly with the fund company or in your
brokerage account. Unlike with bullion, there is no need for storage, and if bought without a
load, no brokerage expense or charges on sales. Mutual funds usual will redeem your shares
on request without liquidity problems associated with bullion.
• Gold mutual funds normally:
○ Have professional management and a range of equity and/or bullion investments
within the precious metals area.
○ Often have performance which is uncorrelated to the broad stock market indexes.
○ May or may not have any correlation with the general market.
• Have price moves that usually correlate positively with gold bullion prices, and typically
with leverage due to company operating leverage.
• All gold funds are in a long term uptrend with bullion, most recently setting new all-time
highs.

The trend of commodity prices to increase is relative to gold price increases.

Worldwide gold production is not matching consumption. The price will go up with

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 demand.

Most gold consumption is done in India and China and their demand is increasing with their
increase in national wealth.

Several gold funds reached all-time highs in 2006 and are still trending upward.

The short position held by hedged gold funds is being methodically reduced.
• If you believe in 'buy low, sell high', gold is still low, but climbing.

1.b.2 TYPES OF INVESTMENT

➢ Physical Metal
➢ Gold ETF's
➢ Gold Mining Stock

Physical Metal
■ Jewellery
■ Gold Coins
■ Tola Bars
■ Kilo Bars Bars

1.b.3 GOLD INVESTMENT PRACTICES IN INDIA

➢ Indians Love PHYSICAL GOLD. Current private holdings are more than 25,000 tonnes held in
form or jewellery, Coins and Bars.
➢ Gold is in the Indian Culture
➢ Gold is a form of storing wealth
➢ Traditionally, Indians bought gold in the form of jewellery that served dual purpose–Jewellery as
well as investment but over the past few years a new trend is emerging wherein in the Bars, Coins
and Purchase is growing.
➢ Fluctuations in Gold Prices make Indians move towards Jewellery, bars & Coins Purchase
especially days before festivals .
➢ Age Old Traditions to Systematic Investment in Gold over a period of time (Man faces less
amount of opposition from family members to buy Gold .
➢ Awareness of Gold prices
➢ Investment in Gold for Life : Wedding, Children, Property purchase, & EMERGENCY.
➢ They are listed in major stock exchanges.

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1.b.3 GOLD EXCHANGE TRADED FUNDS (GETF):

Gold ETF’s is designed to provide returns that, before expenses should correspond to the returns
provided by expenses, should correspond to the returns provided by Gold in the spot market.

1.b.4 ETF ADVANTAGE

Like an Index Listing….

➢ track ‘s the asset Value
➢ Open Ended mutual fund
➢ Low Expenses Ratio
➢ Low Turnover

Like a stock….
➢ Trading flexibility intraday on the exchange
➢ Real time price close
➢ Short term traders are not subsidized by long term investors

1.b.5 WORLD SCENARIO

Gold ETF’s was a huge success worldwide with 10 GETFs Trading on 11 Exchanges with Total
Value of Gold holding more than $15bn. (as on 24th July 2007) Now higher !!!!!!! and
Growing……..

1.b.6 FEATURES OF INVESTMENT IN GOLD ETF

Exchange Traded Funds (ETFs) are open ended mutual funds that are passively managed and most
of them seek to mirror the return of an index, a commodity or a basket of assets. ETFs are listed and
traded on stock exchanges like stocks. They enable investors to gain broad exposure to indices or
defined underlying asset (commodity) with relative case, on a real-time basis, and at a lower cost
than many other forms of investing.

Gold ETFs provided investors a means of participating in the gold bullion market without the
necessity of taking physical delivery of gold, and to buy and sell that participation through the
trading of a security on stock exchange. Gold ETF would be a passive investment; so, when gold
prices move up, the ETF appreciates and when gold prices move down, the ETF loses value.

Why should an investor invest in Gold ETF?

• No worry on adulteration
• Gold provides diversification to the portfolio
• Gold is considered as a Global Asset Class
• Gold is used as a Hedge against Inflation
• Gold is considered to be less volatile compared to equities
• Held in Electronic Form
• Store of value

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 • Extremely Liquid
1.B.7 COMPARISON OF GOLD ETF WITH PHYSICAL GOLD

TABLE 1.B.1

S
Parameter Jeweller Bank Gold ETF
No
Dematerialized (Electronic
1 How Gold is held Physical (Bars / Coins) Physical (Bars / Coins)
Form)
Differs from one to Linked to International
Differs from bank to
2 Pricing another. Neither Gold Prices and very
bank. Not Standard.
transparent nor standard. transparent.
Buying Premium
3 Likely to be more Likely to be more Likely to be less
above gold price
4 Making Charges Charges are incurred Charges are incurred No Charges are incurred
5 Impurity Risk High Nil Nil
Storage
6 Locker / Safe Locker / Safe Demat Account
Requirement
Fund House takes the
7 Security of Asset Investor is responsible Investor is responsible
responsibility
Conditional and
8 Resale Banks do not buy back At Secondary Market Prices
uneconomical
Less convenient, as Gold Less convenient, as More Convenient, as held in
Convenience in
9 needs to be moved Gold needs to be electronic form under the
Buying / Selling
physically moved physically demat account
Quantity to Buy / Available in standard Available in standard Minimum is ½ or 1 gram
10
Sell denomination denomination according to the fund
11 Bid Ask Spread Very High Can’t Sell Back Very Low
12 Risk of Theft Yes, possible Yes, possible No, Not possible
13 Wealth Tax Yes Yes No
Long Term
14 Only after 3 years Only after 3 years After 1 year
Capital Gains Tax

2 PLAYERS IN GOLD ETF’s IN INDIA

PRIVATE SECTOR

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 1. Benchmark Mutual Fund

Benchmark Mutual Fund was setup on June 12, 2001 with Niche Financial Services Pvt. Ltd.
as the sponsorer and Benchmark Trustee Company Pvt. Ltd. as the Trustee Company.
Incorporated on October 16, 2000 and headquartered in Mumbai, Benchmark Asset
Management Company Pvt. Ltd. is the AMC.

2. Kotak Mahindra Mutual Fund

Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of KMBL. It is

presently having more than 1,99,818 investors in its various schemes. KMAMC started its
operations in December 1998. Kotak Mahindra Mutual Fund offers schemes catering to
investors with varying risk - return profiles. It was the first company to launch dedicated gilt
scheme investing only in government securities.

3. Reliance Mutual Fund

Reliance Mutual Fund (RMF) was established as trust under Indian Trusts Act, 1882. The
sponsor of RMF is Reliance Capital Limited and Reliance Capital Trustee Co. Limited is the
Trustee. It was registered on June 30, 1995 as Reliance Capital Mutual Fund which was
changed on March 11, 2004. Reliance Mutual Fund was formed for launching of various
schemes under which units are issued to the Public with a view to contribute to the capital
market and to provide investors the opportunities to make investments in diversified
securities.

PUBLIC SECTOR

4. Unit Trust of India Mutual Fund

UTI Asset Management Company Private Limited, established in Jan 14, 2003, manages the
UTI Mutual Fund with the support of UTI Trustee Company Privete Limited. UTI Asset
Management Company presently manages a corpus of over Rs.20000 Crore. The sponsorers
of UTI Mutual Fund are Bank of Baroda (BOB), Punjab National Bank (PNB), State Bank of
India (SBI), and Life Insurance Corporation of India (LIC). The schemes of UTI Mutual
Fund are Liquid Funds, Income Funds, Asset Management Funds, Index Funds, Equity
Funds and Balance Funds.

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 5. State Bank of India Mutual Fund

State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to launch offshor
fund, the India Magnum Fund with a corpus of Rs. 225 cr. approximately. Today it is the
largest Bank sponsored Mutual Fund in India. They have already launched 35 Schemes out
of which 15 have already yielded handsome returns to investors. State Bank of India Mutual
Fund has more than Rs. 5,500 Crores as AUM. Now it has an investor base of over 8 Lakhs
spread over 18 schemes.
This post takes a look at the gold ETFs that are available to Indian investors. Right now there are six
such gold ETFs in India.
TABLE 2.1
Name Expense Ratio Pricing Per Unit Inception Date
Benchmark Mutual 1% Approximately 1 07 – March 2008
Fund – Gold gram of gold
Benchmark
Exchange Traded
Scheme
UTI Mutual Fund – 2.5% Approximately 1 3rd Jan 2007
UTI Gold Exchange gram of gold
Traded Fund
Kotak Mutual Fund – 2.5% Approximately 1 21st June 2007
Gold Exchange gram of gold
Traded Fund
Reliance Mutual 2.5% Approximately 1 1st November 2007
Fund – Gold gram of gold
Exchange Traded
Fund
Quantum Gold Fund 1.25% Approximately half a 27th February 2008
– Exchange Traded gram of gold
Fund
SBI Mutual Fund – 2.50% Approximately 1 30th March 2009
SBI Gold ETF gram of gold

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TABLE 2.2
ABSOLUTE RETURNS (IN %) AS ON JAN 22, 2010

Listed below are the schemes in the selected category based on their 1 year return

Bottom of Form

Asset 1 1 3 6 3 5
Mutual Fund Ratin
(Rs. NAV w mt mt mt 1 yr 2 yr y y
Scheme g
cr.) k h h h r r
-
AIG World Not 15. 46.
236.12 11.12 7. -3.8 -3.1 -- -- --
Gold Fund (G) Rated 0 5
5
-
DSP-BR World Not 1,489.0 38.
14.14 7. -4.4 -7.8 6.2 6.2 -- --
Gold - RP (G) Rated 5 6
5
-
Benchmark Not 1,621.5 17. 42.
601.70 2. -0.1 2.4 9.1 -- --
Gold BeES Rated 2 5 3
1
UTI Gold -
Not 1,620.2 17. 41.
Exchange 259.87 2. -0.1 2.4 8.7 -- --
Rated 0 4 9
Traded Fund 4
-
Quantum Gold Not 17.
15.06 806.32 2. -0.1 2.4 8.7 -- -- --
Fund Rated 3
4
-
Kotak Gold Not 1,620.0 17. 41.
102.81 2. -0.1 2.4 8.7 -- --
ETF Rated 7 1 7
4
Reliance Gold -
Not 1,575.8 17. 39.
233.88 2. -0.1 2.4 8.7 -- --
Rated 6 0 5
ETF 4

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 - -
DSP-BR World Not
9.61 8.84 7. -4.4 -- 20. -- -- -- --
Gold - IP (G) Rated
5 1
SBI Gold
-
Exchange Not 1,650.4
99.23 2. -0.2 2.1 8.2 -- -- -- --
Rated 9
4
Traded Fund

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TABLE 2.3
Top of Form
RANK AS ON JAN 22, 2010

Listed below are the schemes in the selected category based on their 1 year
return.

Bottom of Form

Asset 1 1 3 6 1 2 3 5
Mutual Fund Ratin
(Rs. NAV w mt mt mt y y y y
Scheme g
cr.) k h h h r r r r
AIG World Gold Not
236.12 11.12 9 7 7 1 1 -- -- --
Fund (G) Rated
DSP-BR World Not 1,489.0
14.14 7 9 8 8 2 5 -- --
Gold - RP (G) Rated 5
Benchmark Gold Not 1,621.5
601.70 1 1 3 2 3 1 -- --
BeES Rated 2
UTI Gold
Not 1,620.2
Exchange Traded 259.87 2 1 1 3 4 2 -- --
Rated 0
Fund
Quantum Gold Not
15.06 806.32 6 1 3 3 5 -- -- --
Fund Rated
Not 1,620.0
Kotak Gold ETF 102.81 2 1 2 3 6 2 -- --
Rated 7
Reliance Gold
Not 1,575.8
233.88 2 5 3 6 7 4 -- --
Rated 6
ETF
DSP-BR World Not
9.61 8.84 7 8 -- 9 -- -- -- --
Gold - IP (G) Rated
SBI Gold
Exchange Traded Not 1,650.4
99.23 2 6 6 7 -- -- -- --
Rated 9
Fund

Investor Requirements for trading in Gold ETF

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 • Trading account with a stock exchange broker
• Demat account as Gold ETF can be traded only in demat form
Settlement: The transactions are settled with T+2 rolling settlement

Load Structure
Entry Load: Nil
Exit Load: Nil

Tax treatment of Gold ETF

The Gold ETF is classified under mutual fund and will be taxed as per non equity mutual fund
taxation rules. Investor investing in Gold ETF need not pay wealth tax. Investor has to pay taxes
after redemption as per the tax laws applicable for non equity mutual fund. But, when the Gold ETF
is redeemed for physical gold the taxation rules will be similar to that of physical gold.

3 PERFORMANCE ANALYSIS OF MUTUAL FUND GOLD ETF

SCHEMES
3. A UTI GOLD ETF ( PUBLIC SECTOR)

Type Of Scheme Open ended Exchange Traded Fund

Date Of Inception 03/01/2007

Scheme Objective To endeavour to provide returns that, before expenses, closely track the
performance and yield of Gold. However the performance of the scheme
may differ from that of the underlying asset due to racking error. There can
be no assurance or guarantee that the investment objective of UTI-Gold
ETF will be achieved.

Asset Allocation Gold bullion: 90% - 100% and Money Market instruments and other debt
securities: 0 - 10%

Face Value Rs.100

Min Investment Amt Investors can invest during the New Fund Offer with a minimum
application amount of Rs 20,000/- and in multiples of Re 1/- thereafter.

Plan Latest Nav Date

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 1620.1971 01/22/2010

Entry Load During NFO period the following load structure would apply. For Appln
size =Rs. 50 Lacs & < Rs. 2 crores is 1.50%, for >=Rs. 2 crores & < Rs. 5
crores is 0.75% and for Rs. 5 crore & above is Nil. There will be no
entry/exit load on UTI Goldshare units bought & sold through the
secondary market.

Exit Load Nil

Fund Manager Ms. Swati Kulkarni

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3. B RELIANCE GOLD ETF

Investment Objective :

The investment objective is to seek to provide returns that closely correspond to returns provided by
price of gold through investment in physical Gold (and Gold related securities as permitted by
Regulators from time to time). However, the performance of the scheme may differ from that of the
domestic prices of Gold due to expenses and or other related factors.

Date of Inception : November 22, 2007

Asset Allocation

INSTRUMENTS % OF RISK
CORPUS PROFILE
Physical Gold or Gold Related Instruments as permitted by 90%- 100% Medium to
regulators from time to time # High
Money Market instruments, Bonds, Debentures, Government 0– 10% Low to
Securities including T-Bills, Securitised Debt* & other debt Medium
securities as permitted by regulators from time to time

# Presently, investment only in physical gold is allowed as per SEBI guidelines.

Investment in gold or gold related instruments may be undertaken as and when permitted by SEBI.

*Upto 10% in securitized debt.

Use of gold related derivative instruments, as and when allowed by regulations.

The above Asset Allocation Pattern is only indicative. The investment manager in line with the
investment objective as may alter the above pattern for short term and on defensive consideration.

Fund Manager - Mr. Hiren Chandaria

Load Structure :

Entry Load - NIL

Exit Load - NIL

Plans Available
• Dividend payout Option
Minimum Investment :
On the Exchange: Minimum one unit is available to all the investors.
With the Fund: 1000 units (permitted only to Authorised Participants as appointed by the AMC)

Benchmark Index - As there are no indices catering to the gold sector/securities linked to Gold,
currently GETF shall be benchmarked against the price of Gold.
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Purity of Gold - All gold bullion held in the scheme’s allocated account with the custodian shall be
of fineness (or purity) of 995 parts per 1000 (99.5%) or higher

Available for trading on the following stock exchanges

1. National Stock Exchange Of India Ltd (NSE)
2. Bombay Stock Exchange Limited (BSE)

Pricing (per unit): 1 Unit=Approx. 1 gram of gold

Expense Ratio as on 30.11.2009: 1% p.a.

Page 25 of 39
4. RESEARCH METHODOLOGY

4.1 Objective:
• To give a brief idea about the benefits available from Mutual Fund investment
• To give an idea of the types of schemes available.
• To study about gold mutual fund schemes and analyse them
• To study performance analysis of one public and private sector of gold mutual fund

• To evaluate performance of selected schemes of different mutual funds on the basis of risk-
return relationship

• To examine investor's perceptions regarding mutual funds

4.2 Sampling unit : Investors

4.3 The Sample size : 30.

4.4 Type of Sampling Design: Non-Probability Sampling - Random Sampling

4.5 Data Collection

4.5.1 Primary Data

As the study demand, the questionnaires were filled by respondents from various segments of
the city.

4.5.2Secondary:

The secondary information is mostly taken from websites, books, journals, etc.

Page 26 of 39
5. FINDINGS & ANALYSIS OF DATA
CHART 5.A) AGE GROUP
Age group Number of Respondents
Upto 25 1
25 -34 2
35 – 44 20
45 – 55 2
Above 55 5

INFERENCE
Majority of investors belonging to age up to 35 years intend not to invest in mutual funds anymore
The age of the investor does have impact on a decision to invest in mutual funds. From our survey
we came to know that only those families who have good financial background they only invest in
the Mutual fund. Upto the age group of 25 only 3.33% of the people investing. There is due to lack
of awareness regarding the investment and they are not the decision maker in the family as far as
financial matters are concern.
The respondents in the age group between 35yrs – 44yrs are maximum. As they are the main
earning member of the family and he also took the decision regarding the investment.
The people belonging to age group above 55yrs are also investing in various mutual funds with the
objective of retirement benefit and also looking for Monthly investment plan which complement
their pension income to manage routine expenses.
The finding shows that quiet a large number of respondents’ belonging to the age group of 35-50
years have varied experiences as regards returns received from investments made in mutual funds.
No investor is in receipt of very high returns than expected on their investment in mutual funds.

CHART 5.B) PERCEPTION OF PEOPLE REGARDING INVESTMENT

Perceptions No.of Respondent

High future optimization 3
Recession 2
Income generation 12
Vague option 2
Tax benefit 4
Future uncertainty 7

Page 27 of 39
INFERENCE
From the survey we can find that 40% of the people are doing investment for future income
generation. They are investing today for a long term vision and to over come future uncertain events
those can not be predicted today. Those who are belonging to business category they are doing
investment for taking care of recession period and other economic ups and downs so that business
do not suffered. People also prefer investment to save tax on their income.

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CHART 5.C) FACTORS INFLUENCING INVESTMENT
Factors No.of respondents
Liquidity 11
Low Risk 7
High Return 6
Company reputation 4

INFERENCE
Among the various factors influencing investment, liquidity is the key factor that attracts the most.
As investor is a salaried person or an entrepreneur he prefers liquidity. Also they required liquid
cash to meet up their financial needs and to cope up with uncertainty.

CHART 5.D) INVESTMENT PURPOSE

Purpose No. of Respondent % of Respondent
Tax Saving 15 50
Diversification 8 26.66
Future Planning 7 23.33

INFERENCE
During our survey we find that 50% of the investors are investing for the purpose of tax savings. As
they get tax deduction benefit and also will get return on investment.

CHART 5. E).AMC PREFERENCE FOR INVESTMENT

Name of AMC No. Of respondent
a. SBIMF 15
b. UTI 5
c. Reliance 6
d. HDFC 2
e. JM finance 1
f. ICICI 1

Page 29 of 39
INFERENCE
In AMC (Asset Management Company) people prefer SBI the most. As it is one of the oldest bank
and people have faith on it. For SBI they have broad customer base and also have customer
portfolio so that they can approach them personally or by phone and make them aware of various
mutual fund schemes. The same case is also with Reliance. As company Reliance is attached with
it. Next in the series is UTI. Actually UTI is the pioneer in Mutual fund.

Page 30 of 39
CHART 5.F) FEATURE PREFERENCE FOR MUTUAL FUND
INVESTMENT
Preference No.of respondent % of respondent
a)

2 6

b)

17 56.66

c) 8 26.66

Page 31 of 39
 d)

3 10

INFERENCE
While investing in the mutual fund people are more concern about debt portfolio feature of Mutual
fund.

Page 32 of 39
6. CONCLUSION
The Indian mutual fund industry needs to widen its range of products with affordable and
competitive schemes to tap the semi-urban and rural markets in order to attract more investors.
The industry has still not been able to penetrate among retail investors and it needs to share best
practices from mature markets like US and Britain where mutual funds are the most preferred form
of investment. Mutual fund companies need to introduce products for the semi-urban and rural
markets that are affordable and yet competitive against low-risk assured returns of government
sponsored saving schemes such as post office saving deposits.
The industry is also overwhelmed by scarce technological infrastructure and needs to collaborate
with other sectors of the economy such as banking and telecommunications.
Mutual fund companies are also required take advantage of the growing opportunity in the
commodities market. Further, the mutual funds could also enable the small investors to participate
in the real estate boom through real estate mutual funds. With a strong regulatory framework, clear
guidelines and the talent to back it up, the Indian mutual fund industry is in a position to cater to the
new breed of investors who are keen to diversify their risks.
BUYING gold on the day of Akshaya Tritiya is considered auspicious. So, this year bring home gold either
in the form of gold ETF.

Traditionally, your only option when it comes to buying gold was in the physical form. But with the launch
of Gold Mutual Funds (Gold Exchange Traded Funds or ETF), you can, now, buy gold in the demat form.

If you’re shopping is purely for investment purposes, then Gold ETF scores over physical gold because of
following reasons:

1. Low cost
2. Transparency
3. Purity
4. Security
5. Capital Tax Gains
6. Wealth Tax
7. Convenience

Thus Gold ETFs offer a convenient, safe and hassle-free investment opportunity in gold, besides reduced
expenses.

When buying physical gold, you next door jeweller is usually a better option because currently banks can
only sell gold but not buy it back and the premium could also be higher.

Page 33 of 39
7. LIMITATIONS
The study is expected to give meaningful insights but can still suffer from some basic limitations as
mentioned below:

• Time Constraint
As the time given to complete the project is lesser than actual time required completing
similar studies, the quality of findings may get affected.

• Sample Size & Nature

The sample size estimated is 30, thus the findings from the same may not be representative
of the actual population.

• Limited Study
The study is limited to the specific schemes available under the mutual funds selected.

• Respondent’s Bias
Some respondents may not state their actual income,& thus under/overstatement of the same
is possible. Moreover some respondents might also not state their actual reasons while doing
investments, due to their ego states.

• The lack of information sources for the analysis part.

Page 34 of 39
8. APPENDIX
QUESTIONNAIRE

A study of preferences of the investors for investment in mutual funds.

We the students of STEVENS BUSINESS SCHOOL, Kalol are doing study on consumer
behaviour pattern on LCD television. We would like to request you to fill up the
questionnaire given below. Your valuable feedback will help us in completing our project
with the analysis of actual test and preference of consumer for LCD television.

1. What do you think about the investment?

a) High future
optimization
b) Recession
c) Income generation
d) Vague option 2. What kind of investments you have
made so far? Pl tick (√). All applicable.
e) Tax benefit
a. Saving account
f) Future b. Fixed deposits
uncertainty c. Insurance d. Mutual Fund

e. Post Office-NSC, f. g. Gold/ Silver h. Real Estate

etc Shares/Debentur
es

i.PPF

3. While investing your money, which factor will you prefer? Any one

(a) Liquidity (b) Low Risk (c) High (d) Company

Return reputation

4. What is your purpose of investment?

Tax Saving 15 Diversification 8 Future Planning 7 Any other please Specify __________________

5. Have you heard of Mutual fund investment?

If “Yes” than please give name of few mutual fund companies.

If “No” then go to question no then questionaarie end here.

6.How do you come to know about Mutual Fund?

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 a. b. Peer c. Banks 15 d. Financial
Advertisement3 Group2 Advisors10

7. Have you ever invested in Mutual Fund? Pl tick (√).

Yes No

8. If not invested in Mutual Fund then please specify why?

(a) Not aware of MF (b) Higher risk (c) Not any specific reason

9. If yes, in which Mutual Fund you have invested? Pl. tick (√). All applicable.

a. SBIMF
b. UTI
c. HDFC
d. Reliance
e. ICICI prudential funds
f. JM mutual fund
g. Other. Specify

10. How do you prefer to Investment?

a. Direct b. In direct

Page 36 of 39
11. Which AMC will you prefer for direct investment?

a. SBIMF

b. UTI

c. Reliance

d. HDFC

e. JM finance

f. ICICI

12. When you invest in Mutual Funds, which mode of investment will you prefer? Pl. tick (√).

a. One Time Investment b. Systematic Investment Plan (SIP)

13. How would you like to receive the returns every year? Pl. tick (√).

a. Dividend payout b. Dividend re-invesT c. Growth in NAV

14.Which sector are you investing in mutual fund sector?

a. Oil and petroleum

b. Gold fund

c. diversified equity fund

d. Power sector

f. Debt fund

g. Banking fund

h. Real estate fund

15.What will you prefer from the following option for future investment in mutual fund?

Page 37 of 39
 a
)
G

b
)
H

c
)
H

d
)
O

16. Personal Details:

(a). Name:-

(b). Add: - Contact No:-

(c). Age:-

(d). Qualification:-

Graduate Pos Graduate Others

(e). Occupation. Pl tick (√)

Govt. Sector Pvt. Sec Business Others

(g). What is your monthly family income approximately? Pl tick (√).

Up to Rs. 10,001 to Rs. 15,001 to Rs. 20,001 to Rs. 30,001

Rs.10,000 15000 1 20,0002 30,000 6 and above 20
1

We are thankful to you for sparing your precious time with us. Your feed back will be fruitful to us
for fulfilling our objective of studying consumer perception on mutual funds.

Page 38 of 39
REFERENCE

• http://www.mutualfundsnavindia.com/mutualfundbasics.php

• http://money.rediff.com/money/jsp/mutualfund.jsp?

schemecode=14053479&schemeplancode=206

• www.research.gold.org/home

• http://www.itrust.in/content/mutual-funds/mutual-funds-ETFs

• http://www.moneycontrol.com/india/mutualfunds/gainerloser/21/04/snapshot/op1/ra/o

ption/gold/sort/yr1

• http://new.valueresearchonline.com/funds/repcard.asp

• http://finance.indiamart.com/markets/mutual_funds/mutual_listed.html

• http://www.investopedia.com/terms/o/open-

endfund.asphttp://www.equitybulls.com/mutualfunds/goldetf.asphttp://www.reliance

mutual.com/OurSchemes/ContentDisplay.aspx?ArticleID=2A08EF09-43E9-4724-

840A-FD1BCFDB1D81

• http://www.utimf.com/product_services/funds/funddetails.aspx?

productid=119&fundid=ETF

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