For investors in gold, DSP Mutual Fund has come up with the DSP Gold ETF Fund of Fund, which is an open-ended fund-of-fund (FoF) scheme investing in DSP Gold ETF. The NFO, or new fund offer for the same, has opened today (November 3) and will run until November 10.
For the layman, an NFO, or new fund offer, is a first-time subscription offer that is opened against the newly launched mutual fund scheme.
Further, a ‘Fund of Funds’ (FOF) is an investment strategy of holding a portfolio of other investment funds rather than investing directly in stocks, bonds, or other securities. A FOF scheme primarily invests in the units of another mutual fund scheme. This type of investing is often referred to as multi-manager investment, explains AMFI.
Here is a quick lowdown on what’s on offer:
Investment objective: The investment objective of the scheme is to generate returns by investing in units of the DSP Gold ETF, which in turn deploys corpus in physical gold, thereby giving investors exposure to physical gold of the highest purity. Anil Ghelani and Diipesh Shah are the fund managers of the scheme.
Scheme benchmark: The scheme will be benchmarked against the domestic price of physical gold [based on the London Bullion Market Association’s (LBMA) gold daily spot fixing price].
Investment required: The minimum application for lump-sum investments (SIP, SWP, and STP) is Rs 100 and any amount thereafter. Also, the scheme offers both regular and direct plans with growth and IDCW options. The investments could be made either directly with the underlying scheme or through the secondary market.
Asset allocation: Under normal circumstances, the FoF scheme will take 95–100 per cent exposure in units of DSP Gold ETFs and 0–5 per cent in cash and cash equivalents.
Risk profile: Investors need to understand that the scheme-specific risk factors of DSP Gold ETFs will be applicable.
Note that the scheme’s performance will predominantly depend upon the performance of the underlying ETF.