Assign 20-30% of your portfolio to gold: Forefront Capital
Ahead of Akshay Tritiya, all that glitters is gold. Considered an auspicious occasion to buy the yellow metal, investors are now
banking on gold exchange traded funds (ETFs) which have been performing well. These are open-ended funds that broadly invest up to 90% in the bullion and the rest in other money market schemes.
In an interview to CNBC-TV18, Radhika Gupta, director, Forefront Capital Management talks about select gold ETF schemes she would recommend for an investor to get into.
Below is an edited transcript. Watch the accompanying video for more.
Q: An investor has Rs 2000 to put per month in a Gold ETF. Which ETF scheme will give a better return in the future?
A: Somewhere between 20-30% of your portfolio in gold is a very good idea. People usually have less than that but gold is a good hedge against inflation. It performs well when equities have a tough period, and so 20-30% is always an advisable number. The best ETF to play in gold is the Gold Bees ETF. This is formerly benchmarked now as the Goldman Sachs ETF. So that’s the best for an investor otherwise he can go for a Gold Fund like the HDFC Gold Fund.
Q: An investor has about Rs 10 lakh lump sum which he wants to divide between two debt funds and an FMP. He already has a balance fund, a large cap and a gold fund?
A: If the investor has a clear idea of what she wants to do that that is good news. FMP comes out very seasonally. So depending on when you want to invest you really need to pick something. I would say pick a one-year FMP with bank paper. Focus on that in the next couple of weeks as it comes out. As for the rest of the money, I would invest half of it in a short-term fund like Franklin Templeton Short Term Fund. I would invest the balance in an income fund if you ready to take a little bit of credit risk. So another ICICI Income Opportunities Fund would be what we would recommend.