Golden Glitter - DSP World Gold Fund

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DSPBR World Gold Fund – Golden Glitter

·         We recommend INVESTMENT into DSPBR World Gold Fund via Systematic Investment Mode with a term of atleast 3 years, by investors who want to diversify their portfolio and looking for benefits linked with the ongoing rally in Gold prices without taking additional exposure in the yellow metal.

·         The fund provides exposure to top gold mining companies in the world and provides opportunity to Indian Investors to invest in these companies.

Investment argument:

·         With increasing need for several economic stimulus and fiscal economic restructuring to tide away the crisis, demand for gold is going to be on the rise however supply is expected to remain limited, resulting in gold prices remaining strong.

·         Gold has been an outperformer during the last 3years growing by ~24.9% CAGR during the period when compared to equities (7.5% by S&P Nifty). The trend is expected to continue considering the need for several economic stimulus and fiscal economic restructuring to tide away the crisis.

·         Stock prices of gold mining companies have not moved up in tandem with the gold prices in recent years thereby making them deeply undervalued, a trend observed incase of comparison made between Gold Prices and NYSE Arca Gold BUGS Index (HUI), index comprised of 16 major gold mining companies.

·         Stronger Gold prices are expected to improve the profitability gold mining companies, thereby improve their stock valuations and increased returns from the portfolios with exposure into these companies.

·         Of the 16 constituents of the HUI index, 6 forms part of the top ten holdings of the DSP BlackRock World Gold Fund.

 


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