Tuesday, April 20, 2010
RELIGARE MIP PLUS - GOLD IS THE DIFFERENCE!!
Religare Mutual Fund which has been coming up with Innovative Funds has come out with another curious Fund, Religare Monthly Income Plan (MIP) Plus.
The fund is 'plus' in the sense that it will have an exposure to Gold through Gold ETF in addition to Fixed Income instruments and Equities.
GOLD impact :
Gold has negative correlation with Equities and is considered a good hedge against Inflation. In normal MIPs, the Fund Manager did not have the flexibility to tilt his allocation towards Gold, but the Religare MIP Plus has this option, which can be used by the Fund Manager to improve diversification and enhance performance.
Gold's inverse correlation will stabilize the risk/return profile of the Fund.
The Fund Manager indicated that he would ideally look at
10-15% Gold Etf
DEBT : The Fund would like to be more inclined towards 'short term' papers around 1 year maturity. The Fund would prefer to invest in Corporate Bonds rather than Govt Papers.
EQUITIES: The Equity portion would be tilted towards Large Cap, sources at the Religare MF said.
GOLD : Gold investment would be in the form of investment into the units of Religare Gold ETF. The Fund has an option to look at other ETFs as well.
COMMENT & RECOMMENDATION:
Pure Gold ETF is not an easy investment option due to the volatile currency situation which can test your skill.
Pure Equity will always carry the 'volatility risk' and test your patience as well.
Here's where a Fund Manager's skill will come into play. He will tilt his investment towards the Best Asset Class depending on the situation and with Gold too as an option, Religare MIP Plus is a "good investment choice" for the equity-averse investor, as this Fund has the potential to add value in varying market conditions.
The Fund is now open for subscription and will close on May 11, 2010.
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