Gold funds offer better returns: Merrill Lynch Intl Invt

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Evy Hambro of the World Gold Fund at Merrill Lynch International Investments said that the World Gold Fund that will now be available to Indian investors. The fund invests in gold equities and does not trade the metal, because the equities offer a superior performance relatively.

Q: Tell us a little bit about the idea behind this fund and the timing of it?

A: Well, we have been running this fund for over a decade now and is going to be available to Indian investors. The fund itself invests in gold equities around the world, we don't trade the metal, and gold equities over time just tend to offer superior performance relative to the price of gold. It is an ideal way for an investor to get exposure to the gold market over time.

Q: What would be an interesting parallel in the Indian market in terms of gold equity?

A: There aren't any gold equities in the Indian market. Most of our gold equities are throughout the rest of the world. The breakdown of our geographic exposures would show a quarter of the fund in South Africa, a quarter of the fund in Canada, some 10-15% in South America and balance in China, Asia and Central Africa.

Q: What kind of returns does a fund like this throw up versus a pure equity fund or an equity-debt kind of mix?

A: Over the last 12 months, the fund is up 8% in US dollars. The index is down 10%. Over three years, we are up 100%. Our benchmark of gold is 50% and the price of gold is up around 60%. So we are outperforming the price of gold by 1.5 times over the three-year period.

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