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DSP Mutual Fund on Thursday, November 2, announced the launch of DSP Gold ETF Fund of Fund, offering investors a digital way to participate in the gold market without the need for physical holdings. The New Fund Offer opens for subscription on November 3, 2023, and closes on November 10, 2023.

This open-ended Fund of Fund scheme will primarily invest in the DSP Gold Exchange Traded Fund (ETF). The NFO provides investors an alternative to traditional gold investment methods, as well as eliminates the need for a demat account for transactions. Investors can systematically invest in gold through SIPs (Systematic Investment Plans) along with the flexibility of redeeming units without any lock-in period.

The move comes as global economic conditions have spurred increased interest in gold. Factors such as reduced global liquidity, growing demand from central banks, and a stagnant supply of the precious metal have put the spotlight on gold as a valuable asset. Gold has historically demonstrated a negative or low correlation with equities, making it an attractive option for diversifying investment portfolios away from the stock market's movements.

"Gold is a great addition to a typical equity – debt heavy portfolio due to the low correlation to these asset classes. The scheme structure presents a convenient way to diversify your portfolio and accumulate gold in a systematic manner, automatically adding depth and multi-dimensionality to your investments," said Anil Ghelani, CFA, Head – Passive Investments & Products, DSP Mutual Fund.

According to DSP Mutual Fund, holding gold in one’s portfolio also helps to smoothen one’s investing journey as Gold is an asset class whose prices typically move in a different direction from other asset classes. Hence, having gold in one’s portfolio helps investors diversify their portfolios, which helps it fall lesser during times of a downturn.

However, one should bear in mind that being a cyclical asset class, entering at the wrong time can impact returns in the short term, it added.

First Published:Nov 2, 2023 8:29 PM IST