HDFC Gold Fund Performance: 42% returns in 5 years, low risk and consistent growth

The HDFC Gold Fund Growth, launched on November 1, 2011, by HDFC Mutual Fund House, offers investors a strategic opportunity to invest in the gold market. With a track record spanning over a decade, this fund has demonstrated consistent performance and reliability. Its primary objective is to seek capital appreciation by investing in units of HDFC Gold Exchange Traded Fund (HGETF). Through meticulous management and adherence to investment objectives, HDFC Gold Fund Growth has become a preferred choice for investors looking to diversify their portfolios with gold assets.

Categorised under precious metals, with Net Asset Value (NAV) reaching Rs 22.08 as of May 28, 2024, it amassed an impressive Assets Under Management (AUM) of Rs 2007 crore.

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HDFC Gold Fund: Risk and Volatility Metrics

Despite its high-risk profile, the fund has exhibited exceptional returns reflecting its ability to generate higher returns relative to its risk.

  • Standard Deviation: 9.08 reflects the fund’s low volatility, indicating more predictable performance.
  • Beta: 0.62 highlights the fund’s comparatively high volatility.
  • Sharpe Ratio: 0.78 underscores the fund’s ability to generate better risk-adjusted returns.
  • Treynor’s Ratio: 0.11 indicates the fund’s ability to generate better returns for each unit of risk taken.
  • Jensen’s Alpha: 5.1 showcases the fund’s ability to generate additional returns compared to a benchmark, reinforcing its strong performance.

HDFC Gold Fund: Investment Objective

  • The primary objective is to achieve capital appreciation by investing in units of the HDFC Gold Exchange Traded Fund (HGETF), providing investors with exposure to the gold market.
  • This investment approach allows investors to benefit from the potential upside of gold prices without the complexities associated with physical gold ownership.

Asset Allocation

HDFC Gold Fund 1-Year SIP Performance

  • With an initial investment of Rs 12,000, the latest value stands at Rs 13,933.85, reflecting absolute returns of 16.12%.
  • The annualized returns, calculated at 31.07%, highlight the fund’s ability to deliver attractive growth rates over a relatively short investment horizon.
  • CAGR (Compound Annual Growth Rate): The 5-year CAGR of 16.43% reflects the annualized rate of return over the past 5 years, providing investors with insight into the fund’s long-term growth potential.
  • Expense Ratio: The fund’s expense ratio of 0.46% indicates the percentage of assets deducted annually to cover operating expenses. A lower expense ratio is generally favourable for investors as it reduces the drag on returns.

HDFC Gold Fund 2-Year SIP Performance

  • Investors who embarked on a two-year SIP journey in the HDFC Gold Fund Growth have experienced substantial appreciation in their investments.
  • Starting with an investment of Rs 24,000, the latest value has surged to Rs 29,860.05, translating to absolute returns of 24.42%.
  • The annualized returns for this period stand at an impressive 22.54%, reflecting the fund’s consistent growth trajectory.

HDFC Gold Fund 5-Year SIP Performance

  • Investors who committed to a five-year SIP in the HDFC Gold Fund Growth have enjoyed substantial wealth accumulation.
  • Starting with an investment of Rs 60,000, the latest value has reached Rs 85,600.54, reflecting impressive absolute returns of 42.67%.
  • The annualized returns for this period stand at a commendable 14.19%, reaffirming the fund’s potential to generate long-term wealth for investors.
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HDFC Gold Fund Tax Implications

  • Gains within 3 years of investment will be taxed at the investor’s applicable slab rate, while gains from redemptions after 3 years will attract a 20% tax rate
  • Additionally, dividend income exceeding Rs 5,000 in a financial year will be subject to a TDS of 10%.

Disclaimer: The information provided in this article is for educational and informational purposes only. It should not be considered as investment advice or a recommendation to invest in any particular mutual fund or asset class. Past performance is not indicative of future results, and investors should conduct their own research and consult with a financial advisor before making any investment decisions. Investing in mutual funds involves risks, including the possible loss of principal invested.