DSP BlackRock World Gold Fund - An Exciting Investment Opportunity
Top Sector Allocation for DSP Blackrock World Gold Fund:
* Gold - 85%
* Silver - 6.1%
* Platinum - 3.7%
* Other - 1.6%
* Cash - 3.4%
* Diamonds - 0.2%
Clearly the fund focus is investment in Gold and Gold mining companies, which is evident from the top ten holdings for the fund as on 28th February 2009:
* Newcrest Mining - 8.6%
* Kinross Gold - 7.8%
* Newmont Mining - 7.1%
* Goldcorp Inc - 6.2%
* Barrick Goldcorp Inc - 6.1%
* Minas Buenaventura - 5.1%
* Lihir Gold - 4.9%
* Harmony Gold Mining Co. Ltd - 4.8%
* Randgold Resources Ltd - 4.6%
* Agnico-eagle Mines Ltd -4.3%
The percentage figures beside each company represents % of net assets allocated to that stock.
This fund prospects:
* The fund has investments in some of the top gold mining companies in the world. In India, there are only few listed gold mining companies and are much smaller in size. Deccan Gold is an example of the same. While, gold has gone up significantly since the financial crisis began, the gold mining companies have not done so well. So in my opinion top global gold mining shares are attractive buys. This fund gives investors in India a chance to buy those stocks.
* Relative to equities and commodities, gold has so far outperformed during this financial crisis. This trend can change and gold can correct significantly. But this does not mean that the bull market for gold will be over. The reason is that the world will have to print a lot of money to try and get out of this crisis. This would typically lead to high inflation in the long term and gold prices would surge up in any high inflation scenario. So when I am speaking of exposure to this fund it is a long term view.
* When gold prices move up significantly in the long term there is greater incentive for gold mining companies to mine and sell more gold to get better prices. Thus, inflation would benefit gold which in turn would benefit gold mining stocks.
So my bullishness on the DSP Blackrock World Gold fund is primairly based on the following factors in summary:
* High inflation in long term, even when there is risk of deflation now
* Relatively undervalued Gold Mining Stocks
* The bull run for gold has just begun
Impact of Currency Fluctuation on the DSP Blackrock World Gold Fund:
Since the gold fund primairly invest in stocks outside India it is very important to have a clear idea of the currency fluctuation impact on the NAV of the fund. To make things very simple the impact is as follows:
* If the Indian rupee depreciates against the US Dollar then it has a positive impact on the fund performance.
* If the Indian rupee appreciates against the US Dollar then the impact would be negative for the NAV of the fund.
So beyond doubt the rupee depreciation has helped the performance of the fund to a considerable extent.
Related posts:
- DSP Blackrock World Mining Fund - An Attractive Investment Opportunity
- DSP BlackRock World Mining Fund - Regular Plan - Dividend Option Details
- DSP BlackRock World Mining Fund - Institutional Plan - Dividend Option Details
- DSP BlackRock World Mining Fund - Institutional Plan - Growth Option Details
- DSP BlackRock World Mining Fund - Regular Plan - Growth Option Details
