This Akshaya Tritiya Buy Gold In A Low Cost Way

Posted On Tuesday, Apr 26, 2022


Akshaya Tritiya is fast approaching and buying gold on this day is considered auspicious and an invitation to herald prosperity into the household. Explore reasons why you need to add Gold to your portfolio and how you need to move beyond conventional forms to one of the most efficient and innovative ways of investing in this yellow metal.

1. Ability to keep pace with inflation

The easy monetary policy adopted by Central banks and supply chain disruptions accelerated by the war have driven up commodity prices globally. In March 2022, India has recorded an inflation rate of 6.95%, the highest since Oct 2020.1 Gold has historically performed well during periods of high inflation.2 As per World Gold Council, in the long run, gold has outpaced the rate of US inflation and moved closer in pace to money supply.

1MOPSI 2WGC

2. Equity-gold inverse relationship

When there is stress in equity markets, having Gold in your portfolio can help reduce downside risk.

Case 1. We saw this during the Pandemic-induced market crash when equity markets fell by 28% early in 2020 and gold prices rose to an all-time high of over Rs.56,000 per 10 gram. Investors who diversified their investments in a combination of assets (Equity+ Gold), saw a lesser downward pressure on their portfolios than investors who were solely invested in stocks, or equity mutual funds. While at the same time in the successive year when equity markets recovered and rose by approx. 21%, gold prices corrected about 20%.

Case 2. More recently, as Russia announced a military strike against Ukraine, financial markets took a hit on Feb 24, 2022. Equity markets experienced sharp selloffs and investors started taking recourse to Gold. Undoubtedly, this was also the day when Gold price had rallied to its one-year high mark, currently nearing ₹54,225 per 10 grams while BSE Sensex has corrected over 4% since the start of the calendar year.

3. Long Term Store of Value

Amid the backdrop of any crisis, be it a financial shock or a geopolitical shock, Gold has held its value and is generally perceived as a safer asset class on a relative basis. For instance, during periods of macroeconomic uncertainty such as the 9/11 terrorist attacks on the US, while the dollar value depreciated, Gold has continued to upheld its intrinsic value.

Here's a low cost and convenient way to invest in Gold this Akshaya Tritiya

It’s time to move beyond conventional forms of investing in the yellow metal and consider the flexible, liquid and cost-effective way of investing: with Gold ETFs.

Gold ETFs have several advantages over physical gold:

• Safe: Offers exposure to gold without having to purchase, store and resell the physical metal.

• Wallet Friendly: You can invest using smaller denominations as low as 0.01 gram of gold unlike physical gold available in larger weights such as 100 grams or 10 grams of gold.

• No pricing markups: No need of paying marking charges associated with physical gold.

• Liquid: Can be liquidated anytime 24X7 at the prevailing rate in tandem with International Gold prices and does not have any lock-in period.

• No storage hassles: No hassles of storage / locker charges and insurance premium. The ETF takes care of the storage in professional vaults and covers your insurance needs.

Though there have been various new ways to invest in gold apart from the traditional avenues such as Digital Gold and Sovereign Gold Bonds.

In comparison to other ways, Gold ETFs are cost effective and liquid.

Digital GoldGold StockGold Futures ContractSovereign Gold Bond
Unregulated form of investmentGold stocks are stocks first and Gold secondHighly complex for retail investors to understandNo pysical gold backing, quaranteed by GOI
Not traded on the Sto ck ExchangeTend to move in line with equitiesHigher riskSecondary market illiquidity
 Not a genuine form in gold exposureSuitable for short term tradingCan be redeemed only after 5 years, however can receive interest income semiannually


Complement your portfolio with the wallet friendly way to Invest in Gold.

Now you can invest up to 20% of your portfolio to efficient forms such as Quantum Gold Fund ETF or Quantum Gold Savings Fund..

To make investing easy, convenient & more accessible for investors, Quantum has reduced the face value of Quantum Gold Fund (ETF) from Rs.100 to Rs.2, effective December 17, 2021. Accordingly, each unit now approximately represents 1/100th of 1 gram of gold, making it accessible & wallet friendly!

 Old structureNew structure
Face ValueRs 100Rs 2
Each unit represents0.5 grams of gold0.01 grams of gold
Quantum Gold Fund NAVAims at achieving risk-return balance vis a vis return45.03 per unit*

*As of April 25, 2022


Advantages of investing in Quantum Gold Fund ETF

Backed by physical gold of 99.5% purityGold stocks are stocks first and Gold secondHighly complex for retail investors to understandNo pysical gold backing, quaranteed by GOINo pysical gold backing, quaranteed by GOI

You can also start investing in gold through a monthly SIP (Systematic Investment Plan) of Rs.500 without having the need to open a DEMAT account with the Quantum Gold Savings Fund.

This Akshaya Tritiya, make the most of the smaller denominations and invest in Quantum Gold Fund ETF and gradually build your gold allocation to form up to 20% of investment portfolio.


GOLD

Related Articles
Russia-Ukraine Crisis: Strengthen your Portfolio with Gold
Investing in Gold Now Got Easier on the Wallet!
Gold Monthly view for Mar 2022

GOLD


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Name of the SchemeThis product is suitable for investors who are seeking*Riskometer
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An Open ended equity scheme investing in companies following Environment, Social and Governance (ESG) theme
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Quantum India ESG Equity Fund
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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
Quantum Liquid Fund
Investors understand that their principal will be at Moderately High Risk
Quantum Gold Fund

An Open Ended Scheme Replicating / Tracking Gold
• Long term returns

• Investments in physical gold
Quantum Liquid Fund
Investors understand that their principal will be at Moderately High Risk
Quantum Liquid Fund

An Open-ended Liquid Scheme. A relatively low interest rate risk and relatively low credit risk.
• Income over the short term

• Investments in debt / money market instruments
Quantum Liquid Fund
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* Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
The Risk Level of the Scheme in the Risk O Meter is based on the portfolio of the scheme as on March 31, 2022.

Potential Risk Class Matrix - Quantum Liquid Fund
Credit Risk →Relatively LowModerate (Class B)Relatively High (Class C)
Interest Rate Risk↓
Relatively Low (Class I)A-I  
Moderate (Class II)   
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