SBI Mutual Fund Launches NFO OPENS: August 22, 2011 NFO OPENS: August 22, 2011 NFO CLOSES: September 05, 2011
Flow of Presentation Flow of the Presentation � Gold Scenario - India Gold as an Asset Class Gold as an Asset Class � � Why Gold Fund? � Introducing SBI Gold Fund � About SBI Mutual Fund � Disclaimer & Risk Factors �
Gold Scenario - India
Gold in India India is the World’s largest Gold consumer � Societal impulse of saving Gold for many Indians � Indian investors preferred holding Gold in the physical form � Gold is culturally ingrained into our lives – Gold for every occasion � Gold has been a traditional means of storing wealth in India � 2% 11% 16% 52% 19% Jewellery Private Investment Official Holding Other Fabrication Others India is the largest consumer of the gold in world & about 52% of its gold demand is on account of jewellery India is the largest consumer of the gold in world & about 52% of its gold demand is on account of jewellery. Source: World Gold Council, Data as on June 30, 2011
Future demand of gold - India World Gold Council says, “About 50% of India's 1.2 billion population is below 25 years of age. Going by the numbers, it is estimated that over the next decade, every year there would be Going by the numbers, it is estimated that over the next decade, every year there would be about 1.5 crores weddings in the country . And since gold is an integral part of most Indian weddings , this itself, will create an additional demand of about 500 tonnes of gold annually , the report said”. And this is over and above an estimated 500 tonnes of gold that would be transferred between the families involved in each wedding. India potentially has perennial demand for gold. Source: World Gold Council
Gold as an asset class
Why gold as an asset? A safe haven � Hedge against currency devaluation & inflation � An effective portfolio diversifier - low correlation with other asset class � A wealth creator � Gold – A multi purpose asset class p p
A safe haven During the times of financial crisis, economic downturns, national crisis, emergencies and � wars etc; Gold has been a safe refuge wars etc; Gold has been a safe refuge. The official gold holdings globally further strengthens the point. � Country Country Tonnes (As on June 2011) Tonnes (As on June 2011) % of reserves % of reserves United States 8133.50 75.30 Germany 3401.00 71.70 France 2435.40 67.60 Italy 2451.80 71.90 Switzerland 1040.10 17.20 India 557.70 8.20 Gold – An ideal investment vehicle during the periods of financial crisis. The percentage share held in gold of total foreign reserves, as calculated by the World Gold Council. The value of gold e pe ce tage s a e e d go d o tota o e g ese es, as ca cu ated by t e o d Go d Cou c e a ue o go d holdings is calculated using the end of month London pm fix gold price published daily by the LBMA. In April , the end of month gold price was $1535.50 Data for the value of other reserves are taken from IFS, table ‘Total Reserves minus Gold’.
Hedge against currency devaluation Generally, the relationship between the gold prices and the dollar is inverse and this gives the hedge against price movements of the dollar. Source: Bloomberg as on 31/7/2011
Hedge against inflation The purchasing power of gold has remained stable over a longer time period. Source: Bloomberg
An effective portfolio diversifier Correlation with other asset classes Correlation is a statistical measure of how two asset classes move in relation to each other. � Gold has significantly low correlation with other asset classes e.g. equities, fixed income and � commodities commodities This low correlation provides an excellent opportunity for: � - Effective portfolio diversification - Maintaining stability in the portfolio returns Maintaining stability in the portfolio returns Source: Bloomberg, from Aug 01, 2008- July 29, 2011
Gold versus other asset class 10 Year return of gold shows that it has performed relatively better than many asset classes. Past performance may or may not be sustained in future. Source: Bloomberg; Data in USD; Data as on July 29, 2011; Returns are CAGR
Gold: A significant upward rally 25000 23211 20000 20650 ces (INR) 15000 16660 MCX Gold Pric 13593 10000 10631 9188 7635 635 5000 5000 0 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jul-11 Gold has been on an upward rally from last few years and has delivered a CAGR of 22.04% during the period of 01.01.2006 to 30.07.2011 Past performance may or may not be sustained in future. Source: Bloomberg
Gold as a consistent performer 45% 39.29% 39 29% 40% 35% 30% 25% 20.98% 20.70% 19.77% 20% 15% 10% 5% 0% 10 Y 10 Years 5 Y 5 Years 3 Y 3 Years 1 Y 1 Year Gold has performed consistently over different time periods in last 10 years. Past performance may or may not be sustained in future. Source: Bloomberg; Data in USD; Data as on July 29, 2011; Returns are CAGR
SIP – The wealth creator 1 Year 3 Years 5 Years 7 Years 10 Years Amount Invested (In Rs.) 60,000 60 000 180 000 180,000 300,000 300 000 420 000 420,000 600 000 600,000 SIP Start Date 01/08/2010 01/08/2008 01/08/2006 01/08/2004 01/08/2001 Gold Value per gram (as on July 29, 2011) (In Rs.) 2,292.98 2,292.98 2,292.98 2,292.98 2,292.98 Units Accumulated (in grams) 30.00 110.98 233.55 411.97 767.04 Investment Value (as on July 29, 2011) 68,797 254,483 535,535 944,640 1,758,806 (In Rs.) Returns 28.63% 23.94% 23.44% 22.80% 20.41% Returns are as on 29/07/2011 with SIP being done on 1 st of every month. Returns are CAGR & have been calculated for cash flows at different point of time using XIRR function in excel spreadsheet for LBMA AM Fix closing prices converted into INR. Past performance may or may not be sustained in the future. Example given above is for illustration purpose only and for understanding the concept of SIP. Mutual Fund/AMC does not assure any safeguard of capital, promise, guarantee or forecast any minimum returns and the illustration should not be construed as indicative of future results. Source: Bloomberg
SIP – The wealth creator SIP Return (%) 35.00% 28.63% 30.00% 23.94% 23.44% 25.00% 22.80% 20.41% 20.00% 20 00% 15.00% 10.00% 5.00% 0.00% 1 Year 3 Years 5 Years 7 Years 10 Years Returns are as on 29/07/2011 with SIP being done on 1 st of every month. Returns are CAGR & have been calculated for cash flows at different point of time using XIRR function in excel spreadsheet for LBMA AM Fix closing prices converted into INR. Past performance may or may not be sustained in the future Source: Bloomberg
Why Gold Fund?
Various options of investing in gold Gold jewellery � Gold coins and bar � Gold instruments (futures) � Gold ETF � And now And now Gold Fund �
Comparison of Gold Fund with other gold instruments Benefit Physical Gold Commodity Exchange Gold ETF Gold Fund G Good control on quality of gold d l li f ld N No Y Yes Y Yes Yes Y Lower cost of holding Yes High Brokerage Cost Yes Yes Risk of theft Yes No No No A Availability in smaller il bilit i ll denomination Yes Yes Yes Yes Wealth Tax Yes No No No Long term investment g Yes Speculation or Trading p g Yes Yes Long term capital gain tax After 3 years No After 1 year After 1 year Auto SIP facility No No No Yes Fragment holdings F t h ldi Y Yes N No N No Y Yes Purchase price Dealer price Stock exchange price Stock exchange price NAV related price Gold Fund is one of the most economic and efficient way of investing in gold.
What is a Gold Fund? A “Fund of Fund" (FOF) is an investment strategy of holding a portfolio of other A Fund of Fund (FOF) is an investment strategy of holding a portfolio of other � � investment funds rather than investing directly in shares, bonds or other securities. In this case, SBI Gold Fund will be investing into SBI Gold Exchange Traded � Scheme
Only one word describes this opportunity… Golden! INTRODUCING
SBI Gold Fund Features � Type of the scheme -: An Open Ended Fund of Fund. � Minimum Amount of Investment -: Rs. 5000 and in multiples of Re. 1 thereafter p � Load Structure � Entry Load – N.A � Exit Load Exit within 1 year from the date of allotment – 1 % � Exit after 1 year from the date of allotment – Nil � SIP Facility : � The minimum amount of investment for SIP transactions is Rs. 6000 (aggregate) either through: (1) Rs.100/- per month and in multiples of Re. 1/- thereafter for minimum 60 months* (2) Rs.500/- per month and in multiples of Re. 1/- thereafter for minimum 12 months (3) Rs.1000/- per month and in multiples of Re. 1/- thereafter for minimum 6 months (4) Rs.500/- per quarter and in multiples of Re. 1/- thereafter for minimum 12 quarters (5) Rs.1500/- per quarter and in multiples of Re. 1/- thereafter for minimum 4 quarters *Shall be available only through the direct debit mode of SBI & associate banks
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