NFO Alert: Tata Mutual Funds launches Tata Gold ETF Fund of Funds.Everything you need to know

Tata Mutual Funds has announced the launch of Tata Gold ETF Fund of Funds. The scheme will open for public recruitment on 2 January 2023 and close on 16 January 2023. The scheme will reopen for continued sales and buybacks by January 24, 2023.

What kind of mutual fund scheme is this?

This is an open-ended fund of funds scheme that invests in Tata Gold Exchange Traded Fund.

This product is suitable for investors seeking:

• long term capital growth
• Returns that match those offered by Tata Gold Exchange Traded Fund

What is the main purpose of investing in this fund?

The primary investment objective of the scheme is to provide returns comparable to those offered by the Tata Gold Exchange Traded Fund. However, there is no guarantee that the scheme’s investment objective will be achieved.

Mr. Anand Vardarajan, Business Head of Institutional Clients, Banking, Alternative Investments and Product Strategy, spoke at the launch. Tata Asset Management “When you don’t know the risk, diversify; when you know the risk, hedge. Precious metals like gold and silver help investors hedge their risks and also diversify their portfolios. They provide the ability to hedge against inflation and risks. ” Gold influences currency fluctuations and is also correlated differently, which helps provide shelter when stock and bond markets become volatile. “An asset class to own. With limited supply and increasing demand for gold, it’s best to have gold in your portfolio.”

How can I invest in this system?

Investors can invest under this scheme with minimum investment amount. INR5,000 per plan/option in multiples of Re 1. There is no investment limit.

Under normal circumstances, the scheme’s asset allocation would be as follows:

Are there similar mutual funds in the market?

To date, many asset management companies (AMCs) have launched such gold ETF funds of funds, where willing investors can enjoy returns comparable to the total return of securities in this particular index. That’s what I’m trying to do. Most of these funds are not very old, so investors can evaluate them only on their recent performance. These include:

How is the performance of this scheme benchmarked?

The plan involves a significant investment in Tata Gold Exchange Traded Fund (TGETF). The underlying benchmark of TGETF is the domestic gold price. Therefore, the domestic gold price is a suitable benchmark to compare performance.

A comparison of the performance of this scheme is made against benchmarks. However, the performance of this scheme may not be strictly comparable to that of the benchmark, primarily due to inherent differences in portfolio construction and expense ratios.

Are there any ingress or egress loads to this scheme?

This scheme does not include an “entry load”. This means that investors do not have to pay anything to secure returns with this scheme. “Exit load” is calculated as follows:

• Redemption/Switch-out/SWP/STP within 365 days of allocation date: If the withdrawal amount or switch-out amount does not exceed 12% of the original investment cost – NIL.
• Redemption/Switchout/SWP/STP within 365 days from date of allocation: -1%/ if withdrawal amount or switchout amount exceeds 12% of original investment cost
• Redemption/Switchout/SWP/STP – NIL after 365 days from date of allotment.

Who will manage this plan?

Tapan Patel is the designated fund manager of the scheme.

Does the Fund involve any inherent risks?

As detailed in the scheme information document, the scheme contains ‘high risk’ and is ideal for investors who want to understand that their principal is only exposed to high risk. However, investors should consult their financial advisor if they have any doubts as to whether the risk is high. The product is suitable for them.