Posted On Saturday, Apr 25, 2020
The auspicious day of Akshaya Tritiya is here. And we hope you're not letting the lockdown dampen your spirits.
So what if we are holed up in our homes? We've got to keep the gold buying tradition going. In fact, the day that marks unending prosperity and wealth in Indian culture seems more important than ever this time with a pandemic gripping the economy and a recession around the corner.
Though we usually suggest a staggered purchasing approach to gold in order to enjoy lower average costs and diversifying your portfolio with at least 10% allocation to gold at all times, this Akshaya Tritiya, thanks to the increasing uncertainty from the health cum economic crisis, confronts investors with a unique question - should I be doing a token purchase or should I buy more and diversify my investment portfolio with the metal?
Let us help you answer that. We're living through a once-in-a-generation event and no precedent exists for the current situation. Hence, until the rate of infection slows down, volatility in financial markets will remain high. So far in this crisis, gold has played an important role in portfolios as a source of liquidity and returns and we expect it to continue to do the same if the crisis aggravates and volatility persists.
In addition, the macroeconomic backdrop has become increasingly favorable for holding gold. Here's why. Firstly, the world is currently staring at virus induced economic deceleration which is expected to encourage the rotation of money from risk assets like stocks and bonds to defensive assets like gold. Secondly, there is heightened risk and uncertainty as to the magnitude of the epidemic and for how long containment measures will be implemented are big unknowns. This will make more investors flock to the safety of store of value assets like gold. In addition, opportunity costs of holding gold are going down as central bankers aggressively cut interest rates and implement liquidity injections leading to currency debasement and inflation. Also, even though the economic slowdown may soften consumer demand for gold, investment flows into the metal are expected to increase as investors flee riskier assets. To make things even better, potential rupee depreciation on account of rising fiscal deficit and foreign institutional investors actively pulling out money from Indian markets will add to Gold's returns when measured in Rupee terms.
With gold's YTD returns at 19.7% and the risk-reward dynamics in favor of the metal, this Akshaya Tritiya seems like a good time to ramp up your gold purchase especially if you have no or low allocation currently.
Now that you know the many reasons for buying gold on this auspicious occasion, the next question on your mind must be, "How do I buy gold?"
Given the nationwide lockdown, there are restrictions on the movement of people as well as non-essential goods. This has made it difficult for people to go about sourcing physical gold coins and bars. But this can turn out to be a blessing in disguise and enable us to move on from being gold consumers, obsessed with holding physical gold, to being gold investors. The inefficient preference for holding physical gold has prevented most of us from optimizing our gold holdings. Not only do we end up paying a high price for this obsession, but it is also prone to a number of risks, most importantly the purity risk.
Instead, we can choose to increase our allocation to the metal via investment products. While Sovereign Gold Bonds offer exposure to gold, they do not fulfill the needs of auspicious related buying as they are not backed by physical gold. Gold ETFs, on the other hand, can serve that purpose as each and every ETF unit is backed by 24-carat physical gold held in secure vaults. These vehicles are not only more efficient but are also regulated by SEBI. And by being operational during the lockdown, they have become a preferred way to invest in gold. Gold ETFs let us sit in the safety and comfort of our home and enable us to buy and sell gold as and when we want. Investors who don't have Demat account or wish to start an SIP in Gold funds can invest in Quantum Gold Savings Fund, which is open 24x7 to invest online.
So what are you waiting for? Gold is auspicious, makes investment sense, and is just a click away! Happy Akshaya Tritiya!
|Name of the Scheme
|This product is suitable for investors who are seeking*
|Quantum Gold Savings Fund
An Open Ended Fund of Fund Scheme Investing in Quantum Gold Fund
|• Long term returns
• Investments in units of Quantum Gold Fund – Exchange Traded Fund whose underlying investments are in physical gold
Investors understand that their principal will be at Moderately High Risk
The views expressed here in this article / video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments.
Mutual fund investments are subject to market risks read all scheme related documents carefully.
Please visit – www.quantumamc.com/disclaimer to read scheme specific risk factors. Investors in the Scheme(s) are not being offered a guaranteed or assured rate of return and there can be no assurance that the schemes objective will be achieved and the NAV of the scheme(s) may go up and down depending upon the factors and forces affecting securities market. Investment in mutual fund units involves investment risk such as trading volumes, settlement risk, liquidity risk, default risk including possible loss of capital. Past performance of the sponsor / AMC / Mutual Fund does not indicate the future performance of the Scheme(s). Statutory Details: Quantum Mutual Fund (the Fund) has been constituted as a Trust under the Indian Trusts Act, 1882. Sponsor: Quantum Advisors Private Limited. (liability of Sponsor limited to Rs. 1,00,000/-) Trustee: Quantum Trustee Company Private Limited. Investment Manager: Quantum Asset Management Company Private Limited. The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.
Get In Touch
Take small steps in financial planning to achieve big dreams! Start your investment journey today!