Gold Funds: Tata Mutual Fund Resumes Large Investor Subscriptions In Gold ETF, Removes FOF Limits
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The move restores full access for large-ticket investors to Tata's gold investment products after a period of capped subscriptions, as fund houses recalibrate exposure to gold-linked instruments.
Tata Mutual Fund has lifted temporary restrictions on investments in its gold schemes, allowing large investors to resume direct subscriptions in Tata Gold ETF and removing the investment cap on lump-sum purchases and switch-ins into Tata Gold ETF Fund of Fund (FOF).
The changes take effect from August 21, following what the fund house described as a normalisation in market conditions. The move comes as gold prices remain elevated and investor interest in gold-linked investment products stays strong.
Under the revised rules, investors looking to put Rs 25 crore or more directly into Tata Gold ETF can now subscribe to the scheme. Tata Mutual Fund has also opened Tata Gold ETF FOF for lump-sum purchases and switch-ins without any investment limit.
The fund house had introduced the restrictions in June. From June 8, direct subscription transactions by large investors in Tata Gold ETF were temporarily restricted. At the same time, lump-sum purchases and switch-ins into Tata Gold ETF FOF were capped at Rs 10 lakh per PAN per calendar month.
Why Did Tata Mutual Fund Remove The Gold Investment Limits?
Tata Mutual Fund said the decision follows a normalisation of market conditions, allowing the earlier restrictions to be withdrawn.
The latest addendum means large investors can once again make direct investments of Rs 25 crore and above in Tata Gold ETF. Investors in the FOF can also make lump-sum purchases or switch into the scheme without the earlier Rs 10 lakh monthly limit.
Tata Gold ETF is an open-ended exchange traded fund that seeks to track domestic gold prices. Tata Gold ETF FOF, meanwhile, invests in Tata Gold ETF, giving investors exposure to gold through a fund-of-fund structure.
The restrictions had been put in place temporarily as market conditions prompted the fund house to manage fresh inflows into the schemes. The revised provisions will remain applicable until further notice.
Gold Funds Deliver Strong Returns As Prices Rise
The reopening of subscriptions comes at a time when gold-linked investment products have delivered strong returns over the past year.
According to ACE MF data, Invesco Gold ETF has generated a one-year return of 57.05%, while Axis Gold ETF has returned 56.99%. Tata Gold ETF has delivered a one-year return of 57.03%.
Among fund-of-fund schemes, HDFC Gold ETF Fund of Fund has generated a 57.71% one-year return. Invesco India Gold ETF FOF and Axis Gold Fund have delivered 55.96% and 56.77%, respectively, over the same period.
The longer-term performance has also remained strong. Invesco Gold ETF has delivered 37.65% over three years and 26.03% over five years. Axis Gold ETF has returned 37.54% over three years and 25.95% over five years.
Tata Gold ETF and Tata Gold ETF FOF have a shorter track record and therefore do not have three-year or five-year return data in the comparison.
Tata Move Follows Resumption By Other Gold Funds
Tata Mutual Fund is among several fund houses that have recently started easing restrictions on gold-focused schemes.
Axis Mutual Fund resumed lump-sum subscriptions in Axis Gold ETF and Axis Gold Fund from August 18. The fund house also allowed large-investor subscriptions of more than Rs 25 crore in Axis Gold ETF.
Invesco Mutual Fund is set to resume unrestricted lump-sum purchases and switch-ins in Invesco India Gold ETF and Invesco India Gold ETF FOF from August 24. The temporary restrictions had been introduced in June.
HDFC Mutual Fund had earlier resumed unrestricted lump-sum subscriptions in HDFC Gold ETF Fund of Fund from August 14.
The series of moves indicates that fund houses are gradually restoring normal subscription facilities across gold-oriented schemes after imposing temporary limits earlier this year.
With gold prices remaining high, the easing of these restrictions could give investors greater flexibility to increase exposure to gold through ETFs and fund-of-fund schemes.
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This article is for informational purposes only and should not be considered investment advice from Kotak Neo. For compliance T&C and disclaimers, Visit www.kotakneo.com/disclaimer
Rochelle Britto has spent 8+ years decoding India's markets, businesses, and consumer economy, reporting for ET Prime and Times Internet along the way, covering the stories behind the numbers.
A Mumbai native and perpetual planner of the next holiday, she stays far, far away from the eternal question, “Where are we going next?” When she's not chasing headlines, she's chasing new cultures, open roads, and a bit of quiet in nature.
