DSP Asset Managers launch Gold ETF, new fund offer to close on April 24. Key highlights here

DSP Asset Managers on Monday launched a new fund offer, DSP Gold ETF which is an an open-ended exchange traded fund (ETF) that tracks domestic prices of Gold. This offer will be available for bidding till April 24th, 2023. Amidst global slowdown and expectations of monetary easing, dollar is seen to weaken ahead which is expected to start a multi-year bull market for safe haven aka gold. 

Anil Ghelani, CFA, Head – Passive Investments & Products, DSP Asset Managers said, “Just as it is important to have a well-balanced diet for good nutrition, we should consider having a well-diversified portfolio with some Gold ETFs. Gold gives us an opportunity to hedge against a standard ‘equity-debt portfolio’ due to its low correlation with equity and often a negative correlation with debt as an asset class.”

Rather than taking a tactical view, Anil suggested investors to seek guidance from their trusted advisor and consider holding Gold ETFs on an ongoing basis, as a strategic asset allocation, in the range of 5 to 10% of your portfolio.

Investing in DSP Gold ETF is a high-risk strategy and is suitable for investor looking for prudent asset allocation. Also, investors must maintain a long-term outlook approximately over 7 years to maximize your return potential by investing in commodities. It needs to be noted that investors can expect short term return fluctuations and up-down market cycles.

Investors who are looking for buying gold as an investment, looking to diversify no more than 5-10% of portfolio into commodities, and value relatively low-cost investing ideas, then DSP Gold ETFs is seen like a one-stop investment option.

DSP Gold ETF invests in physical Gold and is a modern, smart way to own Gold in digital form. Also, its price will be in line with the price movement of gold, with the ability for experienced investors to trade actively on the exchange.

As per DSP Asset Managers, at a time when favourable macro factors and strong fundamentals indicate a good time to buy Gold, this new ETF offers investors an easier way to buy or sell gold compared to the physical version with the freedom to trade easily.

It further said, “Investments in gold have typically done well at a time when there is a weakness in the dollar. With factors such as a global slowdown, the post – covid jump in dollar and expected monetary easing, the dollar is expected to weaken going forward, which could start a multi–year bull market in Gold.”

Further, Ravi Gehani, Fund Manager, DSP Asset Managers explains that with bulk of interest rate hikes likely behind us and continued volatility from global uncertainty, gold prices are expected to see upward movement. 

Ravi added, “With China opening up their economy, and India seeing demand going back to pre-covid levels, Jewelry and Investment demand from the world’s two largest gold consumer nations is expected to pick up, building a good case for Gold.”

That being said, with global liquidity drying up, demand for Gold investments coming back and improvement in Central banks’ holding, the fundamentals are strong for a bullish gold outlook.

DSP stated that holding gold in one’s portfolio can help to smoothen their investing journey as Gold is an asset class whose prices typically move in a different direction from other asset classes. Such diversification in their portfolio can help it fall lesser during times of a downturn. However, being a cyclical asset class, entering at the wrong time can impact returns in the short term.