Union Gold ETF Fund of Fund - Direct (G): NFO Details

The Union Gold ETF Fund of Fund - Direct Plan is an open-ended mutual fund scheme designed to provide investors with long-term capital appreciation by primarily investing in units of the Union Gold Exchange Traded Fund (ETF). This fund offers a convenient avenue for individuals seeking exposure to gold without the need to hold physical gold.

Diversify your portfolio with ease – explore 4000+ mutual funds today!

Start Investing

Details of the NFO: Union Gold ETF Fund of Fund - Direct (G)

Investment Objective and Strategy

Objective:

The investment objective of the Scheme is to generate long-term capital appreciation by investing in units of Gold ETF.

However, there is no assurance that the investment objective of the Scheme will be achieved.

Investment Strategy:

Key Aspects of the Investment Strategy:

Passive Management: The fund does not actively select securities but instead focuses on replicating the returns of its underlying asset, the Union Gold ETF.

Asset Allocation: A minimum of 95% of the fund's assets are allocated to units of the Union Gold ETF, ensuring substantial exposure to gold prices. The remaining assets, up to 5%, may be held in debt or money market instruments to manage liquidity.

Liquidity Management: The small portion allocated to debt or money market instruments aids in meeting redemption requests and managing the fund's liquidity needs.

This strategy is designed for investors seeking to benefit from the potential appreciation of gold prices over the long term through a structured and convenient investment vehicle.

Why Invest in Union Gold ETF Fund of Fund - Direct (G)?

1. Easy Gold Exposure: This fund invests primarily in Union Gold ETF, allowing investors to gain exposure to gold price movements in a hassle-free manner.

2. Hedge Against Inflation & Uncertainty: Gold is a proven hedge against inflation, currency fluctuations, and economic instability. This fund helps protect wealth during market volatility.

3. Diversification Benefits: Adding gold to your portfolio can help reduce overall risk, as it typically moves differently than stocks and bonds.

4. Liquidity & Flexibility: Unlike physical gold, this fund allows easy buying and selling of units without concerns about purity, storage, or security.

5. Tax Efficiency: Investing through a mutual fund structure is more tax-efficient compared to physical gold, which may attract higher taxes and additional costs.

Strength and Risks – Union Gold ETF Fund of Fund - Direct (G)

Strengths:

The Union Gold ETF Fund of Fund - Direct Plan offers a structured and efficient way to invest in gold without the challenges of holding it physically. This fund provides convenient exposure to gold price movements, eliminating the need for storage, security, and making charges associated with physical gold. By investing in units of the Union Gold ETF, it follows a passive investment approach, ensuring returns closely track gold prices without active management risks.

One of the key advantages of investing in this fund is its liquidity. Unlike physical gold, investors can easily buy or redeem units as per their financial needs, ensuring flexibility and ease of transaction. Additionally, investing in a mutual fund structure provides tax benefits, as it is often more tax-efficient than direct investments in physical gold, which can attract higher capital gains tax and additional costs.

With its passive strategy, cost efficiency, and liquidity, the Union Gold ETF Fund of Fund - Direct Plan is a smart choice for those seeking exposure to gold in a structured manner. It is ideal for investors looking for a hedge against inflation, diversification benefits, and a hassle-free investment experience in gold.

Risks:

Investing in the Union Gold ETF Fund of Fund - Direct Plan comes with certain risks that investors should consider before making a decision. Since the fund primarily invests in the Union Gold ETF, its performance is directly linked to fluctuations in gold prices. Gold prices can be highly volatile due to factors such as global economic conditions, interest rates, inflation trends, and geopolitical events. Any significant movement in these factors can impact the value of the investment.

Market risks are inherent in gold investments, as prices may decline due to reduced demand, stronger currency values, or changes in government policies regarding gold trade. Additionally, since the fund follows a passive investment strategy, it does not attempt to outperform the gold market but rather mirrors its returns, making it susceptible to prolonged periods of low or negative returns if gold underperforms.

Liquidity risk is another factor to consider, as while ETFs are generally liquid, redemption pressures or market conditions may affect the ability to exit the investment at a favorable price. There is also tracking error risk, where the fund’s returns may slightly deviate from the actual performance of gold due to fund expenses and operational factors.

Taxation and regulatory risks can also impact returns, as any changes in government tax policies or regulations related to gold and mutual funds can alter the fund’s efficiency and profitability.