Gold ETF beats it all …Again(October Review)

A Review of performance of GOLD ETF based on earlier post Gold ETF beats it all

Gold Exchange Traded funds have performed exceptionally well since their inception in India. One of the primary reasons attributed to it could be inherent bias of Indians towards gold as a precious metal. However, recently Gold is receiving a fair share for investment purposes as well. In times of economic and financial turmoil it is a safe heaven for many.

[picapp align="left" wrap="true" link="term=golden&iid=308593" src="0305/0000305315.jpg?adImageId=10249298&imageId=308593" width="337" height="506" /]

Gold EFT’s which are primarily traded on NSE (see codes) have outperformed many local and International equity indices(BSE, NIFTY, Dow Jones, Nikkei, Hang Seng).
At a time when equities valuations around the world were getting beaten down Gold ETF has provided investors promising returns of more than 15%. Comparing this returns to double digit negative returns of equity indices, surely makes a case for many investors to diversify their existing portfolios and include any of the available Gold ETF’s (BeEs, Kotak, Quantum, Reliance, and UTI)

Listed below is a comparison of returns of Gold ETF with various indices around the world. The NAV for 29-Oct-2008 is considered for comparison. Some data is proportionately adjusted for comparative study.

Scheme Name 1 mth % 3 mths % 6 mths % 1 yr % 3 yrs % NAV Category Structure
UTI Gold ETF (10.52) (8.45) 1.19 16.39 NA 1164.88 ETF Open Ended
Gold BeES (10.51) (8.46) 1.18 16.32 NA 1162.31 ETF Open Ended
Kotak Gold ETF (10.52) (8.44) 1.15 16.29 NA 1165.41 ETF Open Ended
Quantum Gold Fund – Growth (10.51) (8.35) 1.31 NA NA 580.25 ETF Open Ended
Reliance Gold ETF – Dividend (11.07) (9.48) (0.01) NA NA 1136.79 ETF Open Ended
Average performance of similar category funds (10.63) (8.64) 0.96 16.33 NA 1041.93
S&P Nifty (32.64) (38.03) (47.25) (52.63) 5.04
BSE Sensex (31.25) (37.22) (47.06) (52.90) 5.43
Nasdaq (7.32) (5.95) 0.78 (12.73) 1.18
FTSE (2.13) (6.46) (6.23) (14.07) 0.26
Dow Jones (1.89) (5.93) (5.68) (14.03) 2.25
Strait Times (8.74) (14.88) (11.90) (26.62) 3.40
KLSE (6.68) (14.81) (15.30) (18.77) 4.34
HangSeng (8.80) (12.73) (11.21) (8.07) 12.00
Kospi (8.36) (17.24) (12.81) (16.68) 11.10
MSCI World Index 7.41 2.33 8.16 18.73 16.22
Nikkei (6.06) (6.66) (7.57) (21.20) 0.90
*Note:- Returns calculated for less than 1 year are Absolute returns and returns calculated for more than 1 year are compounded annualized.

Golden Quotes:

James Grant : “Nothing beats a little cash in a bear market and the oldest form of cash is gold.”

Karl Marx : “Although gold and silver are not by nature money, money is by nature gold and silver.”

At the end of the day, bullion is more important than the billion.

Related Posts Only (manually created not automatically generated, thankfully)

Advertisements

Reliance SIP+Insure Forms Downloads

Kindly find the link to download forms for Reliance SIP+Insure

Reliance SIP+Insure Form Download(<-Click here) (A new window to a file sharing site shall open)

This forms are for No Broker(ARN-Direct) Applications only. In case you have an existing broker and wish to continue with the same kindly do not download this form.

Why not to invest in Reliance SIP+Insure Plan

Listed below are reasons why you should not invest in Reliance SIP+Insure.

7 Reasons for not investing in Reliance SIP+Insure Plan.

1] The type of Insurance is Group Insurance Policy. The cheapest and easiest form of insurance policy available with any insurance company.

2] Only the 1st Holder is insured. So, in case, a couple subscribes to SIP +Insure then only one person can avail of the insurance benefits.

3] The Sum Assured, in case of death is not paid to the nominee, but shall go back to the scheme of the AMC(Reliance Asset Management Company). Remember, the scheme benfits more than the dependents of the deceased in case of death of the holder.

4] Huge exit load of 2% for discontinued SIP. If you agree to pay your SIP for 11 yrs but pay only for 10 long and tiring yrs, still the scheme charges you 2% for the remaining 1 yr which you do not wish to continue.(learn to calculate exit load charges)

5] No insurance upto 90 days (exception to it is accident cases only) , i.e 3 months. In case of death within 3 months, except of accidental deaths, the scheme shall not pay the dependents a penny.

6] The dependents will end up paying the scheme 2% back if the death occurs within 3 months due to reasons other than accidental death.

7] Minimum period of investment is 3 yrs and Rs 2,000 for each installment, i.e totalling to Rs 36,000 for Group insurance worth less than 10 lacs.

There are group insurance polices availables at a very low costs, which can be availed of for insurance requirements. Insurance worth of Rs 10 lacs may or may not be sufficient for your entire family’s needs.

The Exit loads are relatively very high even if investor is paying his SIP for a long period, if he discontinues even 1 day prior, he ends up paying 2% Exit loads.

Sunny Side to life :

SIP is also available without this offer.

Related Posts Only (manually created not automatically generated)

Reliance SIP + Insure

add to del.icio.us :: Add to Blinkslist :: add to furl :: Digg it :: add to ma.gnolia :: Stumble It! :: add to simpy :: seed the vine :: :: :: TailRank :: post to facebook

Reliance SIP + Insure

Reliance SIP Insure (Systematic Investment Plan) facility is an add on feature of life insurance cover under Group Term Insurance to individual investors opting for SIP in the designated schemes.

It helps to encourage individual investors to save & invest regularly through Systematic Investment Plan (SIP) and help achieve their financial objective without any hindrance

What is the Facility?

  • Reliance SIP Insure provides free life insurance cover to investors at no extra cost. In the unfortunate event of the demise of an investor during the tenure of the SIP, the insurance company will pay for the sum assured as per the terms and conditions of the facility.
  • Thus, the nominee* would be able to continue in the scheme without having to make any further contribution. Investor’s long term financial planning and objective of investing through SIP could still be fulfilled as per the targeted time horizon, even if he/she dies prematurely.

Reliance SIP Insure- Benefits to the investor

**The benefit of Long Term Equity Investment

  • Equities provide relatively better returns among all asset classes over a longer period of time

**The benefit of Systematic Investment Plan:

  • Inculcates Savings Habit
  • Rupee Cost Averaging & Eliminates the need to time the market

**Free Life Insurance Cover

  • Helps to complete the planned investments
  • Maturity Proceeds at NAV based prices

**Flexibility

  • Wide choice of eligible schemes

**Convenience

  • Auto Debit from 4 banks namely ICICI bank, HDFC bank, AXIS bank & HSBC
  • ECS facility across – 65 locations

*Nominee account would mean nominee in case of single holding & second or joint holder in case of Joint Holding

Designated Schemes in which Reliance SIP Insure will be offered

  • Reliance Growth Fund – Retail Plan
  • Reliance Vision Fund – Retail Plan
  • Reliance Equity Opportunities Fund – Retail Plan
  • Reliance Equity Fund – Retail Plan
  • Reliance Equity Advantage Fund- Retail Plan
  • Reliance Regular Savings Fund – Equity option
  • Reliance Regular Savings Fund – Balanced option
  • Reliance Banking Fund
  • Reliance Pharma Fund
  • Reliance Media & Entertainment Fund
  • Reliance Diversified Power Sector Fund – Retail Plan
  • Reliance Natural Resources Fund
  • Reliance Quant Plus Fund – Retail Plan
  • Reliance Tax Saver (ELSS) Fund

Amount of Life Insurance Cover Available:

Under Reliance SIP Insure, the investors are provided life insurance cover without any extra cost under a Group Term Insurance scheme.

The Life Insurance Cover under ‘SIP Insure’ facility will be enhanced as per the following clauses;

  • In the event of death of unit holder within the 1st two years of the commencement of the insurance cover: An amount equivalent to the aggregate balance of unpaid SIP instalments, subject to a maximum of Rs.10 lakhs per investor across all schemes / plans and folios.
  • In the event of death of the unit holder after completion of 2 years (i.e. w.e.f. commencement of 3rd year onwards): An amount equivalent to two times the targeted SIP contribution (committed at the time of registration) i.e. Number of SIP Instalments enrolled for X Amount of Instalment X 2, subject to a maximum of Rs.10 lakhs per investor across all schemes / plans and folios.

The amount of life insurance cover shall be invested in the Nominee’s account in the same scheme* under which the deceased investor has enrolled for SIP Insure at the applicable price based on the closing NAV on the date on which the cheque for insurance claim settlement is received by the AMC from the insurance company, subject to completion of requisite procedure for transmission of units in favour of the nominee.

* Not applicable for Reliance Tax Saver (ELSS) Fund. Investors are requested to note that there will be a lock – in period of 3 years for each SIP Insure installment under ‘Reliance Tax Saver (ELSS) Fund’ as per the Government Notification of 2005 and in the event of demise of the unitholder, the nominee would be able to withdraw the investment amount only after the completion of one year from the date of allotment of the units or anytime thereafter without any exit load. The insurance amount as per the above clauses a) and b) subject to a maximum of Rs. 10 lakhs in a lumpsum in cash will be paid to the nominee in case of death of the unitholder (unlike other schemes, wherein the insurance amount will be compulsorily invested in the respective scheme and the nominee is allotted the units.)

Thus, the amount of free life insurance cover could go upto 360 times of the monthly SIP installment depending upon the enrolled SIP tenure.

Eligibility

  • All individual investors enrolling for investments via SIP & opting for ‘Reliance SIP Insure’
  • Only individual investors whose completed age is greater than 20 years and less than 46 years at the time of investment.
  • In case of multiple holders in the any scheme, only the first unit holder will be eligible for the insurance cover.

Investment Details

  • Minimum Investment per installment: Rs.1000 per month & in multiples of Re 1 thereafter. (Except for Reliance Tax Saver (ELSS) Fund where it is Rs 1000 p.m and in multiples of Rs 500 thereafter). There is no upper limit.
  • Minimum Period of Contribution: 3 years and in multiples of 1 year thereafter.
  • Maximum Period of Contribution: 15 years OR till attaining 55 years of age, whichever is earlier (e.g., a person can register an SIP of maximum 10 yrs at the age of 45 yrs.) The insurance cover ceases when the investor attains 55 years of age.
  • Mode of payment of SIP installments is only through Direct Debit & ECS ( Post Dated Cheques shall not be accepted )

Reliance SIP Insure – How does this work?

  • An investor does a monthly SIP of Rs.5,000 for 5 years in Reliance Growth Fund
  • If he dies after a period of 3 yrs, then his Sum Assured= Number of SIP Instalments enrolled for X Amount of Instalment X 2 = 60 X 5,000 X 2 = Rs 3 lacs X 2 = Rs 6,00,000

This amount will be paid by life insurance company to SIP investor’s nominee account* with Reliance Mutual Fund and will be invested in Reliance Growth Fund (in the same scheme in which the deceased has earlier invested)

Commencement of Insurance Cover: The Insurance cover shall commence after “waiting period” of 90 days from the commencement of SIP installments. However, the waiting period will not be applicable in respect of accidental deaths.

*Nominee account would mean nominee in case of single holding & second or joint holder in case of Joint Holding

Cessation of Insurance Cover:

The insurance cover shall cease upon occurrence of any of the following:

  • At the end of mandated Reliance SIP Insure tenure. i.e., upon completion of payment of all the monthly installments as registered.
  • Discontinuation SIP installments midway by the investor i.e., before completing the opted SIP tenure /installments.
  • Redemption / switch-out of units purchased under Reliance SIP Insure before completion the mandated SIP tenure / installments
  • In case of default in payment of two consecutive monthly SIP installments or four separate occasions of such defaults during the tenure of the SIP duration chosen.

Note -There is no provision for revival of insurance cover, once the insurance cover ceases as stated above

Exclusions for Insurance cover

No insurance cover shall be admissible in respect of death of the SIP-Insure unitholder (the insured person) on account of –

  • Death due to suicide
  • Death within 90 days from the commencement of SIP installments except for death due to accident
  • Death due to pre-existing illness, disease(s) or accident which has occurred prior to the start of cover.

Load Structure

  • The Entry Load under Reliance SIP Insure shall be same as applicable to normal purchase /additional purchase transactions in the respective designated schemes
  • However, there will an Exit Load of 2%, if the accumulated units acquired or allotted under Reliance SIP Insure are redeemed or switched out to another scheme before the maturity of SIP tenure as opted in the respective scheme either by the SIP-Insure unitholder or by the nominee*, as the case may be.

Note:

  • In the event of the death of the investor before completion of SIP Insure Tenure, in case of any contingency there is an option with the nominee* to redeem the amount by paying an exit load of 2% on the repurchase units.
  • However, if the units are redeemed on completing the opted SIP tenure, there will not be any exit load in the respective scheme.

*Nominee account would mean nominee in case of single holding & second or joint holder in case of Joint Holding
The insurance cover for the above schemes is being arranged by the AMC through “Reliance Group Term Insurance Scheme” of Reliance Life Insurance Company Limited. The cost of the insurance premia shall be borne by the AMC.
Free life insurance cover provided as a part of an add on feature called as ‘Reliance SIP Insure’ is arranged and funded by Reliance Capital Asset Management Limited through “Reliance Group Term Insurance Scheme” of Reliance Life Insurance Company Limited.
During the first 2 years of coverage, the sum assured will be limited to the sum of the outstanding SIP instalments from the date of death to be payable in lump sum, subject to a maximum of INR 10 Lakhs. From the third year onwards, the sum assured will be a flat cover equivalent to twice the initial sum assured (i.e., monthly SIP instalment * SIP period in months), subject to a maximum of INR 10 Lakhs. Subject to Conditions.

Source : Reliance Mutual Fund website.

Related Posts Only (manually created not automatically generated)

sip-with-life-cover-from-reliance-mutual-fund

tata-sip-fund

Reliance Gold ETF Price movement chart

Reliance Gold ETF Price movement chart.

Below is the price movement chart for Reliance Gold ETF since 01-Dec 2007 till 29-April-2008.

Price movement chart for Reliance Gold ETF

Price movement chart for Reliance Gold ETF

A trendline is also added to the chart for better understanding purpose.

The prices are the applicable NAV for corresponding period or dates.

Related Posts Only (manually created not automatically generated)

  • Reliance ELSS Tax Saving Fund
  • [picapp src=”2/4/2/4/flow_of_money_2a77.jpg?adImageId=4658437&imageId=5118516″ width=”500″ height=”330″ /]

Reliance Equity Linked Saving Fund – Series I


Investment Objective
The primary objective of the scheme is to generate long-term capital appreciation from a portfolio that is invested predominantly in equities along with income tax benefit.

Asset Allocation
Under normal circumstances, the asset allocation under the Scheme will be as follows:

Type of Security % of Corpus (indicative) Risk Profile
Equities 80 – 100 % High
Debt and Money Market Instruments Up to 20 % Low to Medium
The scheme may invest in equity shares in foreign companies, ADRs / GDRs and instruments convertible into equity shares of domestic or foreign companies and in derivatives as may be permissible under the guidelines issued by SEBI and RBI. As the scheme is governed by ELSS guidelines, such investment will be made, if the ELSS guidelines permit.

The fund managers will follow an active investment strategy taking defensive / aggressive postures depending on opportunities available at various points of time. Subject to Regulations, the asset allocation pattern indicated above may change from time to time, keeping in view market conditions, opportunities and political & economic factors.
It must be clearly understood that the percentages stated above are only indicative and not absolute and that they can vary substantially depending upon the perception of the AMC, the intention being at all times to seek to protect the interests of the Unitholders. Such changes in the investment pattern will be for short term and defensive considerations. However, such changes at all times will comply with ELSS notifications. The asset allocation pattern will be in line with the rules and guidelines of ELSS notifications also.

Investment Pattern
Consistent with the objective of the Scheme and subject to Regulations, the corpus of the Scheme will be invested in any of the following securities.

  • The funds collected under a plan shall be invested in equities, cumulative convertible preference shares and fully convertible debentures and bonds of companies. Investment may also be made in partly convertible issues of debentures and bonds including those issued on rights basis subject to the condition that, as far as possible, the non-convertible portion of the debentures so acquired or subscribed, shall be disinvested within a period of twelve months.
  • It shall be ensured that funds of a plan shall remain invested to the extent of at least eighty per cent in securities specified in clause (a). The scheme shall strive to invest its funds in the manner stated above within a period of six months from the date of closure of the plan in every year. In exceptional circumstances, this requirement may be dispensed with by the Fund, in order that the interests of the assessee are protected.
  • Pending investment of funds of a plan in the required manner, the Fund may invest the funds in short-term money market instruments or other liquid instruments or both. After three years of the date of allotment of the units, the Fund may hold upto twenty per cent of net assets of the plan in short-term money market instruments and other liquid instruments to enable them to redeem investment of those unit holders who would seek to tender the units for repurchase.
The securities mentioned above could be listed, unlisted, privately placed, secured, unsecured, rated or unrated and of any maturity. The securities may be acquired through Initial Public Offerings (IPOs), secondary market operations, private placement or rights offers

Options Available:

  • Growth Plan – Growth option
  • Dividend Plan – Dividend payout Option
Benchmark Index: BSE 100

Minimum Investment Amount:
Minimum initial investment for all categories is Rs.500/- and in multiples of Rs.500/- thereafter. However, as per section 80 C of the Income Tax Act, 1961, the tax benefit will be available only upto a maximum amount of Rs.1,00,000/-.

Specified Redemption Period/Liquidity
The scheme will offer purchase only during the new fund offer period and the redemption/switch-out will be available only during the Specified Redemption Period i.e. first five Business Days on a monthly basis at NAV based prices after an initial lock-in-period of three years from the date of allotment.

Load Structure:
During the New Fund Offer period:
Entry Load: Not Applicable
Exit Load: Nil*
*In accordance with the SEBI (MFs) Regulations, NFO expenses not exceeding 6% of the amount mobilised, will be charged to the scheme and will be amortised over a period of 10 years. If the investor opts for the redemption before the completion of 10 years, proportionate unamortized portion of the NFO expenses outstanding as on the date of the redemption shall be recovered from such investor.

Initial Issue Expenses: Under the SEBI Regulations, the Mutual Fund is entitled to charge New Fund Offer Expenses up to a maximum of 6% of initial resources raised under the Scheme. The New Fund Offer expenses for the Scheme would be amortised over a period of 10 years i.e. tenure of the scheme and would be included in the NAV. Any expenditure in excess of this shall be borne by the AMC. If the investor opts for the redemption before the completion of 10 years, proportionate unamortized portion of the NFO expenses outstanding as on the date of the redemption shall be recovered from such investor.

Example: Unitholder’s Investment Rs. 100

Unit face value Rs. 10, Initial Issue Expenses Rs. 6
No of years amortisation of Initial Issue Expense – 10
3650 Nos of days Amortisation of Initial Issue Expenses
NAV Day one Rs. (94+5.9984)/10 = 9.9998

* Recovery of proportionate Initial Issue Expenses
Redemption before expiry of 10 yrs but after 3 yrs of lock in period from the date of allotment will be subject to an early exit charge. An early exit charge equivalent to the unamortized Initial Issue expenses will be recovered from the investor in case of redemption before expiry of 10 yrs but after 3 yrs of lock in period from the date of allotment. This is illustrated below.
Suppose The scheme has mobilised Rs. 100 crore during the NFO period and Rs.6 cores been incurred towards Initial Issue expenses.
Rs. 6 cores will be amortised equally on a daily basis over a period of 10 yrs. If any investor opts for redemption of 10000 units after expiry of 4 yrs (i.e 48 months), unamoritsed balance of Initial Issue expenses will be recovered from the investor by way of an early exit charge. This will be calculated as follows :

NFO Mobilisation Rs. 100 crores
NFO Units Creation 10 crore (100/10)
NFO Expenses Rs. 6 crore
Amortisation Period 120 months
Amortisation Per Day (6,00,00,000/(120*30) = Rs.16,666.67
Amortisation Per Unit Per Day (16,666.67/100000000) =Rs. 0.000167
Units redeemed after 48 months 10000
Unamortised NFO Expenses
At the end of 48 months = 6,00,00,000- (16,666.67*1460)
i.e Rs.3,56,66,661/-
Unamortised Initial Issue Expenses
Per Unit At the end of 48 months = (3,56,66,661 /10,00,00,000)
i.e. 0.3566

Per Unit Early Exit Charge Applicable at the end of 48 months Rs. 0.3566

Assumed NAV at the end of 48 months Rs.13.5000

Amount payable to the investors Rs.13.5 (-) 0.3566 = Rs.13.1434/-

Recurring Expenses:

Type Upto (%)
Investment Management Fees 1.25%
Marketing Expenses 1.00%
Operational Expenses 0.25%
Total 2.50%

Nomination facility: Available

Inter scheme Switch:
Switch – in from other schemes in Reliance Equity Linked Saving Fund – Series I, will be available only during NFO and at the applicable load structure from these schemes, if any.
Switch – out: Available only during the Specified Redemption Period after expiry of lock-in-period of 3 years, at the applicable load structure in the respective schemes.

Inter plan switch: Not available

SIP: Not Available

SWP: Available only during the Specified Redemption Period

STP: Available as a transferor scheme only after expiry of lock-in-period of 3 years

Sponsor: Reliance Capital Limited.
Trustee: Reliance Capital Trustee Co. Limited.
Investment Manager: Reliance Capital Asset Management Limited.
Statutory Details: The Sponsor, the Trustee and the Investment Manager are incorporated under the Companies Act 1956.

Scheme Specific Risk Factors:
Liquidity aspect of investment in the scheme: The amount invested in the scheme shall be subject to a lock-in of 3 years from the date of allotment and thereafter redemption will be available only during the Specified Redemption Period i.e. first five Business Days on a monthly basis at NAV based prices. Eligible investors in Reliance Equity Linked Saving Fund – Series I are entitled to deductions of the amount invested in units of the scheme, subject to a maximum of Rs. 100,000/- under and in terms of Section 80C (2) (xiii) of the Income Tax Act, 1961. The Scheme does not asssure or guarantee any returns. download application forms here Reliance ELSS SERIES 1

Reliance Natural Resource Fund.

Reliance Mutual Fund (MF) has launched the Reliance Natural Resource Fund, an open – ended equity scheme.
The scheme opens for subscription on Jan. 01, 2008 and closes on Jan. 30, 2008.
The units of the scheme will be available at Rs 10 per unit during the New Fund Offer period.

Objective:
The primary objective of the scheme is to generate capital appreciation & provide long-term growth opportunities by investing in companies principally engaged in the discovery, development, production, or distribution of natural resources and the secondary objective is to generate consistent returns by investing in debt and money market securities.

Options: Growth/Dividend.
The scheme offers growth plan and dividend plan. Growth plan will have the growth option and bonus option. The dividend option will have the payout and dividend reinvestment facility.

The minimum application amount is Rs 5,000 and in multiples of Rs 1.00 thereafter.

The scheme aims at investing 65% to 100% in equity and equity related securities of companies principally engaged in the discovery, development, production, or distribution of natural resources and 0% to 35% in fixed income securities including money market instruments.

Load Structure

If the amount invested is less than Rs 20 million than the scheme will charge an entry load of 2.25% and it will charge 1.25% if the amount invested is less than Rs 50 million. There will not be any entry load if the amount invested is more than Rs 50 million.

The scheme will not charge any exit load.

RELIANCE MF OVERVIEW


Performance and Management

The performance of 65% of the portfolio will be measured against BSE 200 and the balance 35% of the portfolio will be measured against and MSCI World Energy Index.

Reliance Mutual Fund: New Fund Launches

  • Garnering funds not the only objective
  • Thought behind fund launches
  • Potential with a longer term view – key criteria
  • Attempt to provide diversification and uniqueness to an investors portfolio
  • Themes aim to capture maximum return


Flashback: Sector Fund Series (Dynamic Asset Allocation Sector funds)

  • Launched sector funds during 2003-04 when they were not very popular
  • Unique Dynamic Asset Allocation having flexibility to invest 0 -100% in equity and/or 0-100% in debt instruments
  • Four funds launched with a view of 5-7 years
  • Reliance Diversified Power Sector Fund
  • Reliance Media & Entertainment Fund
  • Reliance Banking Fund
  • Reliance Pharma Fund


Macro Economic Scenario: World GDP has been on an upswing
GDP Growth Rates (%)

2001

2004

2007

CAGR
(2000 – 2007)

World

2.5

5.3

4.9

4.3

U.S.

0.8

3.9

2.2

2.5

Euro Area

1.9

2.0

2.3

1.7

India

4.1

7.8

8.4

7.2

China

8.3

10.1

10.0

9.8

Source: IMF

  • Global Economy has been on an upswing since 2001
  • Emerging economies have grown faster than the developed economies


Leading to growing appetite for

  • Infrastructure
  • Consumables
  • Food
  • Power & Energy


This was supported by

  • Capital availability – both debt and equity
  • Low interest rates
  • Higher Income levels
  • Appetite for risk and diversification from investors
  • Money shifting partially to emerging economies

Presenting another Unique Theme & India’s First Natural Resources Fund
“Reliance Natural Resources Fund”


This fund will allow investor to participate in Indian and Global stocks of :

  • Minerals & Commodities
    E.g. Copper, Iron-ore, Zinc
  • Precious Metals
    E.g. Gold, Silver, Diamonds
  • Energy Resources
    E.g. Coal, Oil, Natural Gas, Uranium, Lignite
  • Non-conventional resources
    E.g. Air, Water, Solar
  • Agricultural Products
    E.g. Cotton, Wheat, Corn, Rice
  • Ancillaries to the above
    E.g. Component suppliers, Equipment suppliers
  • Other related companies


Rationale
The rapid economic growth in the emerging economies like India and China has tremendously increased the demand for Natural Resources like Industrial Commodities and Energy. With no new Mega reserves of coal, crude oil, natural gas, metals etc likely to be discovered in the foreseeable future the prices of Natural Resources are likely to remain high and may even go higher.
It is the Fund’s view that India’s growth model promises more stable, sustainable expansion and bigger returns for the investors. There exists a very positive view on the sectors like Agriculture, Manufacturing, Service and Natural Resources which contribute, substantially to our GDP. In our view all these four sectors simultaneously are looking quite attractive and bullish over a longer period.
The Indian Investor like his counterparts in the Emerging Economies is exposed to the economic risks associated with steep and rapid rise in the prices of Natural Resources. There is a need for an Investment Scheme that allows diversified participation to the Indian investors in the Natural Resources Sector.

Why invest in Reliance Natural Resource Fund?

  • From India’s No 1 Mutual Fund with an AUM of Rs 77,764.84 Crs* ( as on 30th Nov 07. Source : http://www.amfiindia.com)
  • An innovative product to compliment current portfolio of funds
  • Huge growth opportunity
  • Valuations attractive compared to potential growth
  • Diversified across resources – not a commodity play
  • Will invest in future growth areas – Agriculture, renewable resources, water, etc
  • Stocks do better than resources themselves

*Source: http://www.amfiindia.com

Outlook

  • Demand would continue to be strong
  • Sustained Infrastructure spending by economies such as India and China would mean tight markets
  • Natural Resources as an ‘asset class’ would only gain more prominence
  • Supply side constraints would remain
    • Inventories to remain at low levels making it difficult to have sustained surplus.
    • Supply would increase but at a lower pace due to significant past under investment
    • Bottlenecks such as lack of skilled manpower would prevent from all out supply glut
  • Prices to remain high
    • Capex costs and operating costs have risen pushing up the long-term prices
    • Higher industry concentration would mean better pricing discipline


    Why Global Diversification now?

    • So far, we felt India was a better investment option offering superior returns, a stand that has been vindicated by strong market performance in India
    • Going forward, merit in looking at opportunities outside India too
    • India does not offer play on many of the resources
    • Some of the global companies are available at attractive valuations
    • Many global companies are now in consolidation phase leading to interesting opportunities as M&A plays.
    • Global companies also offer larger scale plays


    Investment Strategy

    • The Fund invests principally in equity securities of issuers in natural resources industries.
    • The Fund may invest in securities of issuers located anywhere in the world and normally will invest in securities of companies listed on BSE, LSE, NYSE, TSE and ASX.
    • Companies in natural resources industries include companies that RCAM considers to be principally engaged in the discovery, development, production, or distribution of natural resources or are service providers to the Natural Resources Industry; the development of technologies for the production or efficient use of natural resources in addition also furnishing of related supplies or services.

    Natural resources may include, for example, energy sources, precious and other metals, forest products, food and agriculture, and other basic commodities.
    For understanding purpose, companies in natural resources industries may include, for example, companies that:

    • Participate in the discovery and the development of natural resources from new or conventional sources;
    • Own or produce natural resources such as oil, natural gas, precious metals, and other commodities;
    • Engage in the transportation, distribution, or processing of natural resources;
    • contribute new technologies for the production or efficient use of natural resources, such as systems for energy conversion, conservation, and pollution control;
    • Provide related services such as mining, drilling, chemicals, and related parts and equipment


    A particular company will be considered to be principally engaged in natural resources industries if at the time of investment at least 50% of the company’s assets, gross income, cash flow, or net profits is, committed to, or derived from, those industries. A company will also be considered to be principally engaged in natural resources industries if RCAM believes that the company has the potential for capital appreciation primarily as a result of particular products, technology, patents, or other market advantages in natural resources industries.
    Although RCAM may consider the factors described above in purchasing or selling investments for the Fund, it may purchase, sell, or continue to hold an investment for the Fund whenever it believes that doing so may benefit the Fund or on the basis of any of the factors described above or any other factors it may at its discretion consider. (Bombay stock Exchange Limited (BSE), London stock Exchange Limited (LSE), New York Stock Exchange (NYSE), Toronto Stock Exchange (TSE) and Australian Stock Exchange (ASX)).

    Download Form:

    Reliance Natural Resource Fund