MANAPPURAM KANAKA DEEPAM - A CHALLENGE TO GOLD ETF

In terms of return if you explore the oppurtunities the best options will be investment

in shares and Gold. With the launching of Gold ETF (Exchange Traded Funds) in India

by Bench Mark, a new era of savings has begun. Gold ETFs are open-ended mutual

fund schemes that will invest the money collected from investors in standard gold bullion (0.995

purity). The investor's holding will be denoted in units, which will be listed on a stock exchange.

Currently in India, 7 fund houses are offering Gold ETF, and on an average, investor have gained 27% from these ETFs, since the date of inception. Normally in ETF, fund houses usually levies a loading /processing fee of 1.5% to 2.5% per instalment, and minimum instalment is based on price for 1 gram. These are the points were Manappuram Kanaka Deepam (Gold Investment Scheme) has got an really upper edge against these gold ETFs . Manappuram Kanaka Deepam has several postive features as listed below and it is the best Gold Investment Scheme available currently in India. In other words this can be called as Gold Savings Bank Account

1) absence of loading /processing fee2) Minimum amount Rs.250 only3) flexible installments system4) assured return of 7% p.a. 5) simple foreclosure/settlement norms6) absence of foreclosure charges7) remittance facility of the instalments through over 1300 branches .8) Longer duration , upto 10 years9) Similar to savings bank account operation10) No restrictions on no. of transactions11) Bank Account & PAN is not mandatory

If you compare the Manappuram Kanaka Deepam with the other Gold ETFs, annual return from Manappuram Kanaka Deepam will be much higher than the return from Gold ETFs simply as it does not levies any upfront/loading fee.

Inflation, increasing fisical deficits, crude oil price,uncertainity in Euro & US dollars, recession, diminishing gold mines, increased consumption, reduced supply etc are common factor in a growth driven economy, and investment in gold plays as a crucial hedge instrument for arresting these concerns. During the last 9 years average return from the gold is between 16 to 18% . And in almost all the recession period gold has performed very well and even in the last recession period, the following table substantiate that gold is the best hedging product to challenge both the depression and the inflation in recession and boom respectively. Currently the NAV (Net Asset Value of all the ETF units are in the range between 1800 - 1900.

Sl. No.

Fund HouseDate of

Inception

Average Return

1st

Year2nd

Year3rd

Year

Since inception

1 Gold Bench Mark February, 2007 26.76 22.93 27.88 22.712 UTI GOLD March, 2007 26.43 22.75 27.80 27.843 KOTAK GOLD July, 2007 26.35 22.70 -- 29.054 RELIANCE GOLD November, 2007 26.32 21.85 -- 24.035 QUANTUM GOLD February, 2008 26.32 22.74 -- 18.676 SBI GOLD April, 2009 25.43 -- -- 23.947 RELIGARE GOLD February, 2010 - -- -- 11.53

So considering the performance as listed above Manappuram Kanaka Deepam (Gold Investment Scheme) has several added value advantages and an investor can expects a return of 30 – 35% p.a. in the short term and 60% plus in the long term.

Raghu.G, AGM, Internal Audit, MANAPPURAM FINANCE