Personal Finance | Make the most of your investment in gold

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In this episode of the State of the Economy podcast on Personal Finance, Chirag Mehta, Chief Investment Officer of Quantum Mutual Fund discusses the outlook for bullion and the investment options in it with Aarati Krishnan. Chirag has tracked bullion and alternative assets for over two decades. 

Asked about why gold, despite being a safe haven, hasn’t really delivered blockbuster returns despite the many crises afflicting the world – from the pandemic to the Russia-Ukraine war and the current bout of inflation, Chirag explains that this could be due to some of these crises proving short-lived. In the Russia-Ukraine war, for instance, the impact has been contained because it has been restricted to the two nations without wider participation. Central banks have been in a rate hiking spree in recent times, and this has resulted in rising rates on treasuries and other instruments that compete directly with gold. He believes that gold has the potential to outperform, once central banks begin to withdraw liquidity and lower rates in response to a slowdown or recession.

Explaining how Gold Exchange Traded Funds score over Sovereign Gold Bonds (SGBs) as routes to own gold, he points out that ETFs have two attributes that help investors seeking diversification. They offer anytime liquidity which helps investors add to their exposure or reduce it depending on their asset allocation needs. They are also completely backed by physical gold, which isn’t the case with SGBs. This backing lends investors confidence that they are indeed owners of bullion.

On the question of some gold ETFs lacking liquidity and trading at market prices that are way off their NAV, he suggests that investors look at the Gold Savings Fund route to take their ETF exposure. Gold savings funds, which are open-end funds as institutions get to buy and sell gold ETF units at the right price and offer anytime liquidity to the investor. He notes that Quantum Gold Savings Fund charges very nominal fees. He believes that this is a good time to add gold ETFs to one’s portfolio as a diversifier.

(Host: Aarati Krishnan, Producer: Darshan Sanghvi)

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About the State of the Economy podcast

India’s economy has been hailed as a bright spot amid the general gloom that seems to have enveloped the rest of the world. But several sectors continue to stutter even as others seem set to fire on all cylinders. To help you make sense of the bundle of contradictions that the country is, businessline brings you podcasts with experts ranging from finance and marketing to technology and start-ups.

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