Betting on gold

Canara Robeco AMC has launched an open-ended debt scheme, the InDiGo, which will rely on a combination of debt and investments in gold ETFs (up to 35 per cent of the corpus) to generate income for investors. Given the volatility in equity and debt markets, the fund house believes that a debt product that has a gold component will offer higher risk-adjusted returns. On the debt side, given the volatility, the fund will try to minimise the duration risk by investing in short-term instruments. It will look at seasonal opportunities in both short-term debt and gold assets to enhance its returns.

The demand for gold will, it believes, come from investment and declining supply, both from mining companies and governments. Given the uncertainty and volatility in equities, currencies and other commodities, there will be a rise in demand for the yellow metal as investors seek capital protection and a hedge against inflation, feels the fund house. While there are positives, there is a note of caution that a steep jump in gold prices and any bounce-back in equities will take the shine out of the yellow metal.

So, look at this fund if you are a conservative investor looking for a short- to medium-term investment with a gold component. You could also check out Religare’s Monthly Income Plan, a hybrid fund with a predominantly debt allocation and a mixture of gold and equity. The InDiGo fund offer closes on June 15.