What are Gold ETF Funds?

An ETF is an Exchange Traded Fund, meaning it is traded on the major stock exchanges similar to stocks.

They enable investors to gain broad exposure to indices or defined underlying asset (commodity) with relative case, on a real-time basis, and at a lower cost than any other forms of investing.

Gold ETFs provides investors a means of participating in the gold bullion market without the necessity of taking physical delivery of gold, and to buy and sell that participation through the trading of a security on stock exchanges.

Gold ETF would be a passive investment; so, when gold prices move up, the ETF appreciates and when gold prices move down, the ETF loses its value. It tracks the performance of Gold Bullion.

Some of the gold ETFs available in India:

1. Gold Benchmark ETF (GOLDBEES.NS)

2. Kotak Gold ETF (KOTAKGOLD.NS)

3. Quantum Gold ETF (QGOLDHALF.NS)

4. Reliance Gold ETF (RELGOLD.NS)

5. SBI Gold ETF (SBIGETS.NS)

6. UTI Gold ETF (GOLDSHARE.NS)

Factors Affecting Crude Oil Prices

Worldwide Oil production is controlled by OPEC (Organization of the Petroleum Exporting Countries). Over period, OPEC controls the price of the crude oil and tries to keep it at $30/barrel. However, due to a number of factors oil price has gone beyond $50 per barrel.

This article describes some of the important factors which are affecting the global price of the Crude Oil.

1. Global changes in Supply and Demand. Fundamentally, a commodity price is governed by supply and demand paradigm. If the production rate is constant and demand of the commodity increases then price of the commodity will shoot up. On the other hand, if there is a surplus, price will go down.

2. Global Equity Market. Crude oil prices are dependent on the sentiments of the global equity market. How the stocks are performing is also a major factor in deciding the oil prices.

Dow Jones Industrial Average Index, NASDAQ and NYSE are few which governs the US equity market and hence the oil prices as well. Apart from US, China and European market also controls the oil prices.

3. DX Movement. Movement in Dollar index also changes the oil prices on daily basis. When dollar will go up, oil prices will go down and vice versa.

4. OPEC production report. Team of OPEC decides the production of oil and that is also a deciding factor in oil prices.

5. Fuel demand of US. As US is the biggest consumer of the crude oil, therefore, demand pattern of US also has an impact on the oil prices.

6. EIA report. EIA (Energy Information Administration) provides a weekly report on the crude oil inventory of US. Despite the fact that the report does not reflect very correct figure of oil inventory of US as the reporting methodology used by EIA are very old but still market reacts to that.

7. Labor Deptt Report. US labor deptt also comes out with a unemployment report which tells the unemployment rate in US. If more people will sit at home because of unemployment, then they will not be spending money for buying fuel and therefore, crude oil price will go down.

8. Wars, Recession and Natural Disaster are some other important factors that also greatly affects oil prices.



9. Other report (if there is any coming in US, China or in Europe)

Links:

http://money.cnn.com/data/markets/
http://www.bloomberg.com/markets/stocks/world-indexes/
http://www.ibtimes.com/forex/tools-charts/economic_calendar.htm

http://www.oilprice.com/

http://www.oilprices.com/

Best Equity Mutual Funds

Best Equity Mutual Funds

Here are some good equity mutual funds that you should include in your portfolio.

HDFC Top 200 Growth

• It’s an open ended equity diversified growth fund.
• Market capitalization of around 75% asset allocation in large and giant companies and remaining in mid caps.
• On sector wise, its main allocation is in banking and energy.

ICRA Rating:

Reliance Growth – Growth

• Open ended equity growth fund with major allocation in mid size and giant industries.
• Sector wise, financial is the major sector for asset allocation.

ICRA Rating:

Reliance Diversified Power Sector Retail Growth

• It’s an open ended equity power sector fund.
• 6 yr old fund with return of 40% since inception.

ICRA Rating:

Birla Sun Life Frontline Equity Fund - Plan A – Growth

• Open ended equity diversified fund with a return of 31% since launch.
• Its major allocation is again in giant industries mainly in financial and energy sectors.

ICRA Rating:

DSP Blackrock Top 100 Equity Growth

• Open ended equity diversified fund with major allocation in giant and large cap.
• It has strong 35% return since inception (a 7 yr old fund).
• Major asset allocation is in financial and energy.

ICRA Rating:

DSP Blackrock Equity Growth

• Open ended equity diversified, return of 26% since launch.
• Consistency is the virtue of this fund.
• It’s not a pure large cap holding fund. This fund now has its major portfolio in mid size companies.

ICRA Rating:

Hedging Funds Strategies

Hedging Strategies

Hedging is a practice followed by investors to safeguard their investment against market fluctuations. The term hedge fund is used to indicate a 'hedge' against investment deterioration.

When we pay an insurance premium for a new house, we hedge against unforeseen negative events. We can't prevent a negative event from its happening but by hedging, we can reduce its impact on our investment.

Hedging aims at maximizing the return on investment with minimal risk.
Hedge fund managers use a wide variety of different investing strategies to achieve this goal and generally these strategies are managed and executed by a portfolio manager.

Hedging is very popular in wide investment instruments like stocks/equities, derivatives and commodities.

Short selling is one such hedging strategy where an investor makes a short position on a falling stock and makes profit out of it. In short selling, investor borrows a contract from a broker and sells it at the market price with the understanding that it must later be bought back (hopefully at a lower price) and return it back to the broker. Difference in the selling and purchase price goes to investor as a profit.

This strategy is very useful in scenarios when a commodity price falls very sharply due to some unforeseen circumstances, e.g., due to natural disaster like cyclone or due to US jobless report came out in the media or could be due to inventory pile up.

Hedging is the practice of offsetting the price risk inherent in any cash market position by taking an equal but opposite position in the future market. A long hedge against the possible risk of rise in stock price refers to buy position in future market when a sell is already made on a similar stock. In the same way, short hedge refers to selling a future contract when a similar contract is already bought and market is showing a downtrend.