Posts Tagged ‘assets’

SHIFT IN GOLD DEMAND: PERFORMANCE OF ETFs

Gold’s appeal as an alternative investment option remains high. Historically equities have performed better than gold barring certain minor aberrations here and there. However, asset allocation is an important aspect of any investment strategy. By balancing asset classes of different correlations, investors hope to maximize returns and minimize risk. While many investors may believe that their portfolios are adequately diversified, they typically contain only three asset classes – stocks, bonds/fixed income instruments and cash. To counter adverse movements in a particular asset or asset class, many investors now strive to achieve more effective diversification in their portfolios by incorporating alternative investments such as commodities. While gold has shown strong returns over recent years, its most valuable contribution to a portfolio lies in the fact that it is not correlated with most other assets. This is because the gold price is not driven by the same factors that drive the performance of other assets. Demand for gold may continue to rise as investors diversify their portfolio with an asset that is not correlated with the equity markets. In the melt down seen in 2008-09, gold was not correlated with the other assets and hence saved.

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Gold’s price action in the past few months has frustrated many traders. High volatility in prices created much risk for the investors as well as for intra day traders. At this time ETFs plays a major role as Gold ETFs provides investors a means of participating in the gold bullion market without the necessity of taking physical delivery of gold, and to buy and sell that participation through the trading of a security on stock exchange. Gold ETF would be a passive investment; so, when gold prices move up, the ETF appreciates and when gold prices move down, the ETF loses value. Each unit is approximately equal to price of 1 gram gold. But, there are Gold ETFs which also provide a unit which is approximately equal to the price of ½ gram of gold.

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Gold exchange traded funds (ETFs) serve several functions in both good times and bad. These days, we’re seeing it primarily workingas a safe haven for investors. According to the World Gold Council’s (WGC) latest Gold Investment Digest (GID), the quarter Q2 2010 recorded significant net inflows into various gold backed investment vehicles, as investors sought to harness gold’s investment benefits at a time of weakness and pronounced volatility in other asset classes. Investors bought 273.8 net tonnes of gold via exchange traded funds (ETFs) in Q2 2010. This represents the second largest quarterly inflow on record with the total amount of gold held in the ETFs monitored by WGC to over 2,000 tonnes (worth US$81.6 billion).

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Till now India has been the biggest consumer of gold but gold exchange traded funds (ETFs) were not much popular in India. However, things are changing fast inIndia. With increasing popularity more and more people are now putting their money on Gold ETFs. As a sign of this, India’s gold collection under exchange-traded funds rose 76 per cent in June 2010 from a year ago to 10.453 tonnes. There has been an increase of customers by 70-80 per cent (on year). Most of the participation  was from high net worth individuals and other retail investors. The gold ETFs, instruments that trade like shares and are backed by physical gold holdings, are more than three year old and may get crowded with some other funds planning their entry.

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Over the past nine years, gold has managed to post successive increases in its annual average price, navigating the choppiest of waters.

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From the above mentioned chart it is clearly visible that gold ETF’s has given significant return on yearly basis.GOLDBEES does the best and it does quite well in volumes also, thatis due to the fact that its expenses are lower than the competitors. More competition is always good for the customer, but unless someone comes up with an ETF with expenses lower than GOLDBEES, we can imagine GOLDBEES to be the best on this chart.

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ETF have shown consistent growth in volumes both in terms of number of trade and turnover. Based on the underlying asset different types of ETFs have been identified. The turnover and price of each class of ETF listed on NSE is given below.

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Advantages of Investing in Gold ETFs

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•Potentially cheaper to have price exposure to gold price as compared to other available avenues.

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•Quick and convenient dealing through demat account.

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•No storage and security issue for investors.

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•Transparent pricing.

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•Taxation of Mutual Fund.

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•Can be traded on stock exchange like buying / selling a stock.

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•Ideal for retail investor as minimum lot size to trade is one unit on secondary market.

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•NAV of a unit tracks price of approximately ½ or 1 gram of gold.

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The above mentioned benefits make gold ETFs much better investment avenue for the investors rather than investing in gold through any other source. However as we are seeing that strong investment demand for gold is quite visible, with investors viewing gold, a real asset and as a hedge against medium-term inflationary pressures and potential US dollar weakness. While also providing important diversification benefits, investors may continue to look to gold as a safe haven asset and an alternative currency in the face of volatile currency markets in coming period. Also the rising awareness among Indian investor regarding investment through gold ETFs may boost the demand in near future.

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Set Up New Financial Plans After A Divorce !!

Set Up A New Financial Plans After A Divorce

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You need to do long term financial planning when you are going through a divorce.

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It’s important that you recover from the split by assessing your situation as singles and setting up new financial plans with a focus on longevity.

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Here are five simple steps for building your financial future after a divorce:

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1. Start with a plan.

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Take a look at your finances before the divorce and then subtract what you’ve lost to give you a good perspective on your fiscal situation.

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Be realistic with yourself and set a budget that you can easily manage with your new single status.

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2. Check your credit.

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Maintaining your credit is an important step in walking away from a divorce financially intact.

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Examine your credit reports and ensure that any name changes or card closures are accurate and taken care of.

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3. Ensure your retirement.

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Confirm that all of your retirement arrangements are intact and that any assets or funds you are entitled to have been taken care of.

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Division of savings and accounts should be paramount in your review.

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4. Obtain the necessary insurance.

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Examine your insurance policies and make sure that you and your property are still covered.

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5. Review your taxes.

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Understanding the tax ramifications of your divorce is a key part of planning for your financial future.

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Confirm that all tax responsibilities between you and your spouse are coordinated appropriately.

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RBI to Assess Affairs of Foreign Banks Operating in India

RBI to Assess Affairs of Foreign Banks Operating in India

RBI to Assess Affairs of Foreign Banks Operating in India

The Reserve Bank of India (RBI) decided to run a detailed assessment of the risk-management capabilities and evaluate the transparency in financial affairs of all foreign banks operating in India with an aim to ensure that they do not pose any systemic risk to the banking sector.

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However, until this process is finished, foreign banks are doubtful to be permitted to open more branches in India while India has committed to allowing 12 new branches to foreign banks in a year, but has been more liberal.


Moreover, this has resulted in a high presence of foreign banks in India as their WTO commitment allows them to deny licenses to foreign banks once their share in the total assets of the banking system exceeds 15%.


Additionally, as it comes in the aftermath of the financial crisis, the audit reflects concerns over an unduly large presence of foreign banks creating risks for Indian financial markets.


Meanwhile, the finance ministry and the central bank had always supported allowing foreign banks to operate in India as they thought that increased presence of foreign banks boosts the efficiency of the domestic banking sector.

Bear and Bull Part 2

Hello Friends,

Just an extension of our previous blog ” Bear and Bull Part 1″.

Both bull and bear markets are inevitable

Both bull and bear markets are inevitable

In this Blog we would touch upon if bull and bear markets are inevitable and what are the basics investors should keep in mind while trading in bear and bull market 🙂

Both bull and bear markets are inevitable!

Smart investors try to anticipate both events to profit from their eventuality.

Bear markets are generally shorter in duration than bull markets.

To avoid being hurt by bear markets you must recognize the signs early and move part of your assets into cash equivalent investments.

It is recommendable that one should invest for the long term. Don’t let the bears get you down!

The same thing is true of bears – don’t panic and sell low.

Let the bear market run its course, which history tells us is likely to be short.

On the other hand, a bull market can leave many investors feeling pretty good about their ability to prosper.

Their confidence bolstered by the good times.

Some even find themselves swept up in “Bull Market Myopia” and forget the basic tenets of smart investing, like asset allocation and portfolio diversification.

Holding good stocks through bull and bear markets is a prudent strategy.

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However, many investors feel that they do not want to be in the market during a bear market. It is difficult to predict when to move in and out of the market.

When a bear market ends, a strong upward move can occur in a short time.

If you are not in the market you will miss the move. The probability that your timing will be wrong is very high.

Unlike slow-starting bull markets, bear markets may start with a mini-crash – a major drop within a few days when investors least expect it.

Many investors are afraid to get out of a bull market for fear of missing “big profits” at the top of the market.

This is a recipe for disaster!

It is also known as greed!

As a bull market continues to increase, investors should start to decrease their stock holdings and move them into cash or money markets accounts.

Now, besides bulls and bears there are two other animals in our zoo to keep watch for!

Ostriches:

Are investors who stick to their old strategies, oblivious to changes in the world around them.

And then there are the Hogs.

Bulls can make money. Bears can make money.

But Hogs are investors who are too greedy and usually get slaughtered!

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Gold Touches a New High of Rs 16,220 per 10 gram !

Gold-surges-alltime-high

Due to the speedy buying by stockists in advance of the festival season, in the midst of the global rates climbing to an 18-month high of $ 1,018.15 an ounce, GOLD rose by Rs 250 to touch a new high of Rs 16,220 per 10 gram in the gold market.

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However, it is said that after the metal in London increased to an 18-month high, the buying action gathered momentum as stockists indulged in buying gold.

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While, the concern was that a global economic revival may strengthen inflation in the midst of a weak dollar, enhancing demand for the metal as an alternative investment.

On the other hand, gold in overseas markets advanced 10.60 dollar, or 1.1%, to 1,018.15 dollar an ounce whereas silver coins also touched a record high of Rs 31,800 per 100 pieces.

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Further, standard gold and ornaments spurted by Rs 250 each to Rs 16,220 and Rs 16,070 per 10 gram, respectively.

On the other side, sovereign increased by Rs  50 to Rs 12,950 per piece of 8 gram.

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Marketmen said the precious metal might see new peaks in the coming days once the festival and marriage season starts on September 19.

Current upsurge maybe purely out of reason of stockists buying as retailers refrained from buying gold during ‘Sharaadh’, the ongoing inauspicious fortnight in Hindu mythology.

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According to analysts, gold may climb a high level of $1,100 an ounce in the overseas market in the next six months.

Silver ready shot up by Rs 700 to Rs 26,600 per kg and weekly-based delivery by Rs 910 to Rs 27,570 per kg.

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Silver coins rose to an all-time high by gaining Rs 200 to Rs 31,700 for buying and Rs 31,800 for selling of 100 pieces.

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However in between due to the increasing investment demand with the commencement of festival and marriage season, gold imports observed a huge rise during August at 21.8 tonnes as compared to the previous month where the import of the precious metal was 7.8 tonnes this year.

This shows that India’s gold imports have trebled in a gap of one month.

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Indian Stocks Rose to a 15-Month High :)

Indian-stocks-15-month high

Indian stocks rose to a 15-month high yesterday. 🙂

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DLF Ltd led gains as investors judged recent declines as excessive. Mahindra & Mahindra Ltd climbed on a report it will make sports utility vehicles for overseas markets.

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DLF, the biggest real estate developer, jumped 5.5% after losing 10% in the previous five trading sessions.

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Mahindra & Mahindra, the largest sports utility vehicle maker, advanced 1.5%.

Sterlite Industries (India) Ltd, the No 1 copper producer, added 3.8% after metals prices climbed.

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The Bombay Stock Exchange’s Sensitive Index (Sensex), rose 240.26, or 1.5%, to 16,454.45, the highest since May 28, 2008.

The gauge declined 0.3% on Monday, snapping a six-day rally.

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“There is strong liquidity supporting the market,” Jagannadham Thunuguntla, the head of equities at SMC Capitals Ltd in New Delhi. “Yesterday’s fall has made some stocks attractive.”

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The rupee advanced against the US dollar as overseas investors added to holdings of the nation’s assets amid signs economic growth is quickening.

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The rupee climbed 0.2% to 48.655 per dollar at the 5pm close in Mumbai, according to data compiled by Bloomberg.

The currency has risen 0.4% this month.

India’s $1.2tn economy expanded 6.1% in the three months to June from a year earlier, accelerating for the first time since 2007, the government said last month.

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