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Copyright Aditya Birla Nuvo Limited 2008 Birla Sun Life Mutual Fund.

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Presentation on theme: "Copyright Aditya Birla Nuvo Limited 2008 Birla Sun Life Mutual Fund."— Presentation transcript:

1 Copyright Aditya Birla Nuvo Limited 2008 Birla Sun Life Mutual Fund

2 Copyright Aditya Birla Nuvo Limited 2008 What is Birla Gold ETF Birla Sun Life Gold ETF (BSL GETF) is an Open ended Gold Exchange Traded Fund. The Fund would invest in physical gold of prescribed quantity and quality (fineness). The investment objective of the Scheme is to generate returns that are in line with the performance of gold, subject to tracking errors. Exchange Traded Funds (popularly known as ETF) are schemes whose units are listed on the Stock Exchange and can be bought or sold at a price, which may be close to the NAV of the scheme. ETF tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange.

3 Copyright Aditya Birla Nuvo Limited 2008 Where the Scheme will Invest

4 Copyright Aditya Birla Nuvo Limited 2008 Why Should I Invest in Gold It is not correlated with other asset classes because gold price is not necessarily driven by the same factors that drive the performance of other asset classes. Gold has been called a "barometer of fear." When people are anxious about the economy - they turn to gold and bid the price up. The two main things that make people anxious are deflation and inflation. Gold is an inflation hedge as proved by a 400-year study of the purchasing power of gold in Britain between 1596 and One ounce of gold would consistently purchase the same amount of goods and services as it would have done 400 years ago.

5 Copyright Aditya Birla Nuvo Limited 2008 Why Should I Invest in Gold Gold has significantly low correlation to other assets like equity indices, fixed income and commodities. Therefore adding gold to a portfolio may help improve risk adjusted returns or reduce volatility for the expected return. High Domestic Demand: India is the largest gold market in the world. In terms of jewellery consumption, investment and industrial demand, it accounted for ~32% of total global demand for gold in 2010.

6 Copyright Aditya Birla Nuvo Limited 2008

7 Why Should I Invest in Gold Rising demand in other Emerging Markets: Gold purchases in China, the world s largest producer, climbed to 200 metric tons in the first two months of 2011 as faster inflation boosted consumer demand. China s investment demand in 2010 jumped 70 percent to tons, surpassing Germany and the U.S., as buyers sought out bars and coins. The boom in gold demand in China is also driven by concern about inflation pressure and the poor performance of alternative investments. India & China collectively account for 52% of the global demand for Gold in 2010 (Source: WGC, Bloomberg).

8 Copyright Aditya Birla Nuvo Limited 2008 Why Should I Invest in Gold Hedge against a weak US Dollar: While the returns of gold are lowly correlated to global stocks and bonds, it has an inverse relationship with the dollar. With the U.S. dollar plummeting 8-12% since June, 2010 against major global currencies and the Federal Reserve buying $600 billion in U.S. treasuries in its second round of quantitative easing, more individuals are turning to gold and silver to protect themselves from increasing inflation, the continued devaluation of the dollar, and a future which is difficult to predict. (As on 31 Mar Source: Google Finance )

9 Copyright Aditya Birla Nuvo Limited 2008 Why Should I Invest in Gold Safe Haven Status and Store of Value: Gold is not tied to any particular country or financial system, possibly providing stability in periods of economic uncertainty. Tensions in the Middle East and North Africa are high, and there is a great amount of uncertainty as to what will happen next. Investors have always flocked to gold as a safe haven and hedge in times of uncertainty and crises – bank failures, low and declining interest rates, war, economic crises, etc. Gold prices could go higher in case of continuing political unrest in Libya and other areas in the Middle East and North Africa.

10 Copyright Aditya Birla Nuvo Limited 2008 Why Should I Invest in Gold Limited Annual Supply Growth: Despite rising gold prices over the last several years, mine supply has not increased. New mines are typically located in more difficult locations, limiting the ability to grow supply quickly. The price of gold tracks the shifting balance of supply and demand. Long lead times in gold mining mean production of gold is relatively inelastic, regardless of increases in demand. That s why the rally in the gold price since 2001 has not engendered a meaningful increase in gold production levels.

11 Copyright Aditya Birla Nuvo Limited 2008 Importance of Owning Gold The correct way to think about owning gold is as insurance. Unlike shares of a company or government bonds - gold will always retain value. Gold's most important use is insurance against the paper (fiat) currency of the country you live in. Almost every country has had at least one major "currency crisis" over the last one hundred years. Those that had some of their wealth in gold survived. So, think of gold as insurance. Do not think of gold as a way to "make money." Do not try and "time the market."

12 Copyright Aditya Birla Nuvo Limited 2008 Why not Gold Coins/Bars/Jewellery

13 Copyright Aditya Birla Nuvo Limited 2008 Gold Price Change

14 Copyright Aditya Birla Nuvo Limited 2008 Gold-Performance

15 Copyright Aditya Birla Nuvo Limited 2008 Gold Price-5 Year

16 Copyright Aditya Birla Nuvo Limited 2008 Gold Price-10Year

17 Copyright Aditya Birla Nuvo Limited 2008 Gold Price-15Year

18 Copyright Aditya Birla Nuvo Limited 2008 Gold ETF-Turnover

19 Copyright Aditya Birla Nuvo Limited 2008 Gold ETFs-Turnover

20 Copyright Aditya Birla Nuvo Limited 2008 Gold ETF-Turnover

21 Copyright Aditya Birla Nuvo Limited 2008 Calculation

22 Copyright Aditya Birla Nuvo Limited 2008

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