Mutual Funds
BOI AXA Gold Income Stabilizer Fund: A hybrid mutual fund scheme with a fixed asset allocation strategy

BOI AXA Mutual fund plans to launch a scheme maintaining a fixed allocation of 40% towards gold. Not only do hybrid funds don’t work, but allocating 40% towards gold could be highly risky

BOI AXA Mutual Fund plans to launch an open-ended hybrid scheme—BOI AXA Gold Income Stabilizer Fund. According to the draft scheme information document filed the scheme would allocate 60% to debt and money market instruments and the balance 40% would be invested in gold. The fund manager would rebalance the portfolio at the end of every quarter to bring it back to the prescribed limits. Usually, many schemes set a range for the asset allocation and the fund manager had the flexibility to invest within the stated range depending on the market outlook. Therefore if the fund manager feels that gold is currently attractive, he would increase the allocation towards gold reducing the debt component. The new scheme from BOI AXA Mutual Fund, however, does not depend on the fund manager’s analysis to vary the allocation but will follow a fixed allocation strategy. This would be risky because as much as 40% would be invested towards gold.
Why has the scheme chosen 40% to allocate towards gold is not mentioned. Gold is a highly speculative asset and there is no specific way to value it. Unlike other financial assets, gold does not pay interest or dividend. Besides, in inflation-adjusted terms gold has not been a great performer. During a period of economic prosperity, gold can go down quite a bit in a continuous fashion over years. Too many complex and global factors influence the price of gold. Not only is it impossible for individual investors but even for teams of fund managers to get all these elements right to make any worthwhile bet on the direction and magnitude of gold prices. Therefore allocating 40% of an investment towards gold could be highly risky.

Please read more about mutual funds, here.
There are other schemes which invest their assets in both debt and gold. An analysis by us earlier this year showed that adding gold did not help. (Read: Hybrid Funds: Adding gold did not help ) Though most of the schemes we analysed had an equity component, Canara Robeco InDiGo has an allocation of 65%-90% towards debt and 10%-35% towards gold. Launched in 2010, the scheme has returned 6.69% over the past one year. The BSE Sensex on the other hand returned 15.46% for the same period, gold was up by just 6.58%.
Alok Singh would be the fund manager of the scheme. He has only seven years of experience in the fund industry, working earlier with BNP Paribas Asset Management. The performance of the scheme would be benchmarked against a customized composite benchmark comprising of 60% CRISIL Short Term Bond Fund Index and 40% the price of gold. Exit load would be 1% if redeemed within one year from the date of allotment. The annual scheme recurring expenses would be 2.25% per annum of the average daily net assets. Expenses would eat up a lot of the return.



siddharth biswal

4 years ago

i totally wean away retail invesors from FD's towards MF's debt funds & hybrid's are best form as LT gain tax is much lesser than interest being taxed.Morever as long as Govt loves printing money gold will remain favourite.It may not reach Rs 1lac/10gm in recent future but will provide decent returns,beat inflation for sure with safety net & dependable in uncertain stock market.Perfect hedge against rupee.this is the same reason RBI itself is stocking up on gold.Instead of buying physical gold paper gold in ETF is much better option.Here fund manager bias is restricted who tend to copy sensex in equity schemes & brag about their performance.

CII Capital Market summit has no place for retail investors!

The upcoming meet of Confederation of Indian Industries to discuss ways of expanding and ‘deepening’ the Indian capital markets has no place for the retail investor. Has corporate India written off retail investors? Or do they continue to think that retail investors have nothing to contribute to policy making?

On 12 December, the Confederation of Indian Industries (CII) will hold its 4th Capital Market Summit in Mumbai. A quick look at the agenda and the speakers shows that almost every capital market segment has a role and a space at the summit except the biggest stakeholder of all—the 10 million retail investors.

The theme of the summit is  “Deepening of Capital Markets: Faster Growth of the Economy” and the objective is: Facilitating raising of capital from domestic resources; restore capital markets as the centre for capital formation; and, building stable and mature capital markets. To our mind, all three objectives need to take into account the retail investor. More specifically, it should address why 20 years of economic liberalization and so-called capital market growth has halved the number of retail investor. The most recent survey commissioned by SEBI (Securities and Exchange Board of India) puts the retail investor population at 10 million, which is two million more than that reported by the D Swarup Committee report.

Without the presence of retail investors, markets lack depth and companies find it hard to make successful IPOs.

However, CII is apparently unconcerned. It has put together industry representatives of every kind -- investment bankers, private equity investors, mutual funds, at least four stock market chiefs, regulators, law firms and banks (which hard-sell products to investors) – to deliberate on how to grow the size of the capital market. It is satisfied that if they interact with lawyers, policy makers, investment bankers, advisors and other corporate stakeholders who are helpfully listed under “who should attend”, the summit should be successful.

Is it any surprise then that investors’ fury at repetitive, cumbersome Know Your Customer (KYC) processes are never addressed. It is any surprise that transmission of shares remains a slow, expensive and endless process? And is it any wonder that investors have voted with their feet and switched to bank fixed deposits, gold or real estate or tax-free bonds?

Retail mutual fund investors have also been pulling out of SIPs (systematic investment plans) in large droves. As many as 5.10 lakh SIPs were ceased before the completion of the stipulated tenure (

Here’s the irony—excluding trustee members, there is no direct representative from the mutual fund industry to speak either in the CII summit. In the past, summits of this sort at least had a token representation from investors, investor groups or at least analysts who were seen as the voice of the ordinary investor. But industry has now chosen to dispense even with this pretense.

Keeping retail investors out of capital market summits would have made sense if there were other forums for the regulators to address their concerns or interact with them. But this does not happen either.

The chief guest at CII’s summit is UK Sinha, the chairman of SEBI. In over two years at SEBI, Mr Sinha has diligently addressed a plethora of corporate summits or events organized by industry associations and chambers of commerce, but there is no record of his having addressed any genuine investor meets or directly engaging with investors.

In fact, under his tenure, SEBI does not even respond to investors’ email suggestions; worse even letters from retired secretaries of the government of India are mechanically transferred to the outsourced grievance redressal mechanism which sends out absurd replies like “the issue is not under SEBI’s jurisdiction”. This happened specifically in the case of former expenditure secretary EAS Sarma and has been published by Moneylife.

The bigger irony is that the finance ministry, the ministry of corporate affairs is forever exhorting market intermediaries and stock exchanges to conduct “financial literacy” seminars, as though lack of financial literacy and not bad policy making or mis-selling or regulatory apathy have driven away investors.




4 years ago

Those who want to deepen the capital markets seem to be clueless about how to get the retail investor to invest again.

They are just hoping, retail investors will flock back to the capital markets with rising equity market indices.

The sensex has gone past 19000 but, yet, there are no signs of the retail investor coming back.

We need to remember, Equity also means fair and impartial distribution of wealth - Till that happens, retail investors are not at fault if they prefer to stay away.
Financial literacy and Tax breaks may not be the solution by themselves.

K G Krupal

4 years ago

Backyard plant is not medicine is a proverb in Kannada. We are forgetting our real strength i.e.huge retail base and focusing on few big institutions including FIIs for the market directions. If one thinks of involving huge retail base into the capital market through the registered brokers and Sub-brokers numbering more 80 thousand, our markets will be more strong and stable. By this our country's financial literacy ranking can be improved from the present level of 23 and financial literacy should be improved from present level of 35% to achieve higher ranking. This will yield good long term results. WITHOUT INVOLVING OUR RETAIL BASE NOTHING CAN BE ACHIEVED. THAT IS WHY EVERY foreign institution is looking at India. Better late than never.

Vaibhav Dhoka

4 years ago

Retail investor has absolutely no place in policy making.Retail investor is MEAL for these sharks and moreover during scams,for brokers/mutual funds or corporates.

Government de-recognises Archery Association for age and tenure violations

The President elect of the Archery Association of India, Vijay Kumar Malhotra has served for more than three consecutive terms in the past and is also above the age of 70 years

New Delhi: The Sports Ministry on Friday de-recognised the Archery Association of India (AAI) with immediate effect for "violating the age and tenure guidelines" of the government's Sports Code during its elections last month, reports PTI.
"The Archery Association of India held its elections on 9 November 2012. While the procedures adopted in the elections were in conformity with the procedures laid down in the Sports Code and common practice, the Archery Association has violated the age and tenure restrictions prescribed in the Sports Code," Sports Minister Jitendra Singh told reporters during a press conference here.
"The President elect of the Archery Association of India has served for more than three consecutive terms in the past and is also above the age of 70 years.
"The High Court in its Civil Writ Petition No.195/2010 dated 15.02.2012 and 17.09.2012 had directed that the government shall not grant recognition to the Archery Association of India unless they hold elections as per the Sports Code. In view of the directions of the High Court, the government has no option but to withdraw the recognition of the Archery Association of India," the minister said.
During its elections last month, octogenarian BJP leader Vijay Kumar Malhotra was re-elected as the president of the AAI for the 10th term which means he will retain the position for an unprecedented 40th year, a gross violation of the age and tenure guidelines under the Sports Code.
The Sports Minister has advised the AAI to hold fresh elections for the post of president, in conformity with the Sports Code.
Jitendra has also asked the AAI to amend its constitution to bring it in conformity with the Sports Code and the Olympic Charter.
The Sports Minister said as an impact of the de-recognition, the government will stop funding the AAI with immediate effect.
"Nor will assistance to hold national and regional championships be available. The government is contemplating interim measures, by which athletes are not affected. The government will also open a dialogue with the international body (IOC) to ensure that participation of Indian athletes is not hampered in any way," Jitendra said.
The Sports Ministry's also decided to suspend recognition to the Indian Amateur Boxing Federation (IABF), citing "flawed and faulty elections".
The ministry decided to suspend recognition to IABF after the International Boxing Association provisionally suspended the Indian federation for "possible manipulation" in its recent elections.
The de-recognitions of AAI and IABF by the government came just three days after the International Olympic Committee has suspended Indian Olympic Association for not following the Olympic Charter during its recent elections.


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