I have been reading that gold would do well now due to global uncertainties. Due to liquidity, I want to invest in gold through mutual funds. I don’t have a demat account to invest in exchange-traded funds (ETFs). Are there other ways to invest in the yellow metal via mutual funds?
There are two options to invest in gold via mutual funds. The primary route is by subscribing to gold ETFs which are managed by the fund houses and then tradeable in the secondary market through the stock exchanges. However, as you rightly pointed out, you will need a demat account to do so. In case, you don’t have a demat account and still want to invest in gold through mutual funds, you can consider the alternative option - using fund-of-funds. Funds like these route investments in gold ETFs and the performance of the scheme tend to correspond with the performance of the ETFs.
In the current uncertain interest rate scenario, is it advisable to invest in fixed maturity plans (FMPs)?
FMPs have different maturities and credit profiles to suit the needs of different investor base. Being closed-end schemes, investments in FMP’s are locked in and can be redeemed on stock exchanges before maturity. FMP also provide the benefit of indexation and long-term capital gains if invested for over three years.
My father wants to save money for my daughter. Can a grandparent invest in his granddaughter’s (minor) name? What happens after she turns 18?
Yes. A grandparent, as a guardian through his/ her bank account, can invest in the name of the minor grandchild in any of the mutual fund
scheme, by completing KYC (Know Your Customer) and third-party declaration formalities. Select asset management companies (AMCs) also have specific children oriented plans – as part of their portfolios offering solution-based plans. The grandchild will be the first and sole holder of such investments. Basic documents establishing the relationship with the minor and the minor’s date of birth will have to be provided. Any standing instructions in the account - systematic investment plan, systematic transfer plan
or systematic withdrawal plan
- will be registered only up to the date of the minor attaining majority. Once the minor attains the age of majority (18) he or she will have to update details such as PAN, KYC, bank account details.
The writer is MD and CEO, SBI Mutual Fund. The views expressed are the expert’s own. Send your queries to firstname.lastname@example.org