DSP Asset Managers on Monday launched a new fund offering, DSP Gold ETF, which is an open-ended exchange-traded fund (ETF) that tracks domestic gold prices. This offering will be available for auction until April 24, 2023. Amid a global slowdown and expectations for monetary easing, the dollar is expected to weaken, which is expected to trigger a multi-year bull market for the safe-haven a.k.a. gold.
Anil Ghelani, CFA, Head of Investments and Passive Products at 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 certain ETFs on gold. Gold gives us the opportunity to hedge against a standard “stock-debt portfolio” due to its low correlation to stocks and often a negative correlation to debt as an asset class. »
Rather than taking a tactical view, Anil suggested investors seek advice from their trusted advisor and consider holding gold ETFs on an ongoing basis, as a strategic asset allocation, in a range of 5 to 10% of your portfolio.
Investing in DSP Gold ETF is a high risk strategy and is suitable for investors looking for a conservative asset allocation. Additionally, investors should maintain a long-term perspective of approximately 7 years to maximize your return potential by investing in commodities. It should be noted that investors can expect short-term yield fluctuations and up and down market cycles.
Investors looking to purchase gold as an investment, looking to diversify no more than 5-10% of their portfolio into commodities, and who like relatively inexpensive investment ideas, then DSP Gold ETFs are considered a unique investment option.
DSP Gold ETF invests in physical gold and is a modern, smart way to own gold in digital form. In addition, its price will be in line with the evolution of the price of gold, with the possibility for experienced investors to actively trade on the stock exchange.
According to DSP Asset Managers, at a time when favorable macroeconomic factors and strong fundamentals indicate a good time to buy gold, this new ETF offers investors a simpler way to buy or sell gold compared to to the physical version, with the freedom to trade easily.
He adds: “Investments in gold have generally performed well in times of weak dollar. With factors such as a global slowdown, post-Covid dollar rise, and expected monetary easing, the dollar is expected to weaken in the future, which could trigger a multi-year bull market in gold.
Additionally, Ravi Gehani, fund manager at DSP Asset Managers, explains that with the bulk of interest rate hikes likely behind us and continued volatility due to global uncertainty, gold prices are expected to experience an upward movement.
Ravi added: “As China opens its economy and India sees demand return to pre-Covid levels, jewelry and investment demand from the world’s two largest gold-consuming countries is expected to pick up, thus constituting good arguments for gold. »
That being said, with global liquidity drying up, investment demand for gold returning, and central bank holdings improving, the fundamentals are strong for a bullish outlook for gold.
DSP said that holding gold in one’s portfolio can help smooth one’s investment journey, as gold is an asset class whose prices typically move in a different direction than other asset classes. Such diversification of their portfolio can help it fall less during economic downturns. However, given that it is a cyclical asset class, entering it at the wrong time can impact short-term returns.
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