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... rates, higher commodity prices, resurfacing of sovereign debt concerns, central banks buying activity and strong physical demand,? said Sundeep Sikka, CEO, Reliance Capital Asset Management, which runs India's largest mutual fund, Reliance Mutual ...
Bouncing back from losses in June 2011, gold funds glittered last month with the yellow metal gaining ground, as the global financial system remained cautious.
Investors in gold funds reaped rewards in July with net asset value (NAV) of the average yellow metal scheme going up 5.4 per cent, its third highest monthly appreciation in 10 months.
The gain appears sweeter when we compare them with the average 2.4 per cent loss for large-cap equity funds registered in the same month. The fundamental factors that drive gold prices are not the same as the ones that affect other asset classes. Gold has lower volatility than other asset classes. Hence, gold improves the risk-adjusted returns of a portfolio and acts as an excellent portfolio diversifier.
?The longer term outlook on gold remains bullish due to concerns of inflation, negative real interest rates, higher commodity prices, resurfacing of sovereign debt concerns, central banks buying activity and strong physical demand,? said Sundeep Sikka, CEO, Reliance Capital Asset Management, which runs India?s largest mutual fund, Reliance Mutual Fund.
With large-cap stocks bearing the brunt in July, allocations to mid-cap as well as small-cap stocks cushioned the fall in diversified equity funds this month. Mid-cap stocks rose around 1 per cent, while small-cap stocks rose about 2 per cent in this month.
In line with historical market behaviour during falls, select defensive sector funds focused on FMCG industry, such as ICICI Prudential FMCG, SBI Magnum FMCG and Franklin FMCG, appeared to have done well logging between 2-7 per cent gains.