Best Performing US Based India ETFs in 2012

When I wrote about how NRIs could invest in India last week, one of the options I mentioned was India based ETFs listed in your domestic exchange.

For most NRIs, this is a very convenient method and is useful for others who are interested in gaining exposure to India as well.

There are a number of India based ETFs in the US and in this post I’m going to list them down along with their performance in 2012 as well as what indices they track.



YTD Return*


1 EGShares India consumer (INCO)   50.25% Indxx India Consumer Index
2 iShares S&P India Nifty 50 Index Fund (INDY)  29.47% S&P CNX Nifty
3 India Infrastructure ETF (INXX) 29.11% INDXX India Infrastructure Index
4 EGShares India Small Cap (SCIN)  28.89% Indxx India Small Cap Index.
5 India Small Cap Index ETF (SCIF) 26.5% Market Vectors India Small-Cap Index
6 iPath MSCI India Index ETN (INP)  26.89% MSCI India Total Return Index
7  WisdomTree India Earnings Fund (EPI) 23.93% WisdomTree India Earnings Index.
8 PowerShares India Portfolio (PIN)  13.94% India Index (Index)
9 Direxion Daily India Bull 3X Shares (INDL)  22% Indus India Index
10 MSCI India Index Fund (INDA)  NA MSCI India Index
11 MSCI India Small Cap Index Fund (SMIN) NA MSCI India Small Cap Index

*Returns as on Nov 29 2012.

A few points on the table above:

INCO’s Exceptional Performance

EGShares India Consumer (INCO) is unusually up, and I don’t know why that is at the moment, but I will do a follow up post on this unusual gain next week.

Similar Performance

Other than that, most other ETFs are close in returns even though they are quite different in nature, and this is perhaps a bit disappointing for the small cap ETFs because in India, the small caps tend to fall a lot more than the large caps during bear runs so you would hope that the small caps outperform the large caps as well. However, at least for this small time period, that hasn’t been true.

Wide Range of India Based ETFs

I had done such a list some time ago, and at the time there were only three or four ETFs so I am pleasantly surprised to see a lot more options present in the India ETF list today. You have a lot more options to choose from, and they are all quite different from one another.


There are quite a few India based ETFs in the US and at least for American investors who want to invest in India, there is no dearth of options. All these options also mean that you need to research them carefully and understand what you are buying into. INDY is very different from PIN and PIN is very different from INDA. I will do a detailed post on the objective of each of these funds later on in the year, and that will help build a good understanding of what fund to invest in based on your goal.


New Comment System: Disqus

A quick note to talk about what I consider a reasonably big change here on OneMint. Since yesterday, a new comment system called Disqus has been installed on the site.

The idea was actually triggered by Anil Kuppa who is a regular reader here, and I wanted to give it a try because the standard WordPress comment functionality is quite limited and I haven’t seen any major improvements in the comment system since the early days of WordPress.

Disqus is widely used and there are many features there that can be quite useful. The best feature is that you can keep track of every comment you ever posted so that gives you an excellent way to see all your comments at one place.

Currently, there is one big issue with the new system where it is just not allowing people to post comments as ‘guests’ using just their name and email like the WordPress site used to do.

You can still post comments using your Facebook, Twitter, G+ or Disqus id but if you don’t have one of these or don’t want to use one of these, you won’t be able to post comments.

When I read about this plugin and saw how other sites used it – I felt that this feature is available, and I have raised a case with Disqus to understand why I am seeing this error.

If in fact it doesn’t have a way to allow people to post comments without registering then we will get back to the older system, but if there is a way then I’ll post a small update about it and let everyone know.

In the meantime, please email me with any other problems you may be noticing or any suggestions on how to use Disqus better as that will be really helpful for everyone. And if you know of a way or a good link that talks about the problem we’re facing here – that will be just fantastic.

You can register with Disqus using this link.

Warren Buffett on Taxes

A very interesting thing (at least in my mind) happened yesterday. On the right rail there is this section called ‘Popular Posts’ that shows posts here that are popular on that day.

I saw the budget post on where the government gets its money from float to the top and thought that something was broken. Why would such an old post suddenly become popular?

When I investigated further I saw that someone had shared that post on Reddit India and the traffic burst was a result of that. The comments there are very interesting and quite different from the comments you’d expect on OneMint, and the one thing that struck me about that comment thread was why hasn’t anyone raised the point that the revenue from income taxes are quite low as a percentage of total revenues? Since tax was the one thing people were talking about the most.

They say that only about 3% of Indians pay income taxes, and I’m sure everyone agrees that the salaried class share the burden of income taxes disproportionately, then why aren’t people complaining about that?

In an American context, Warren Buffett has been talking about the rich paying a lot less in taxes than the rest of the American public and he talks about that yet again in a recent interview he did.

I’m embedding the video below as it is quite entertaining as well as educational (although not new for anyone who has been following this discussion for long).


Here is the link to the complete show if you want to watch the whole episode.

REC Tax Free Bond Issue 2012 – 13

REC is the first company to start offering tax free bonds in this financial year (2012 – 13) and their issue opens on December 3rd 2012 and ends on December 10 2012.

REC has been allowed to raise Rs. 5,000 crore through tax free bonds this year out which they have already raised Rs. 500 crores via private placement and this issue is for Rs. 1,000 crores. So this means that there likely will be another tranche before the financial year ends. However, last year’s experience shows that there is very little variation in the interest rates of even two issuers, let alone two issues from the same company. The interest rate on tax free bonds is also capped to the average G-Sec yield of the same maturity so there’s not much much you can expect in terms of a better rate.

Terms of the REC Tax Free Bond Issue

There are two series of bonds, one with a 10 year maturity and another with a 15 year maturity and then there are 4 categories of investors that can invest in them.

Retail investors get a slightly higher interest rate, and they are under category IV.

Here is a table that shows the details of this issue.


REC Tranche 1 Series 1

REC Tranche 1 Series 2

Face Value

Rs. 1,000

Rs. 1,000

Interest Rate: Retail Investors



Interest Rate: Other Investors




10 years

15 years

Interest Payment



Physical and Dematerialized Form

REC is going to issue the bonds in both physical and dematerialized so you can buy them offline if you are inclined to do so. This also means that a Demat account is not necessary to buy these bonds.

Which sections are these bonds tax free under?

Somebody wanted to know this  last year, and I imagine that’s more for preparing for an exam of some sort rather than any real practical use, but anyway, the bonds are exempt under Section 10 (15)(iv)(h) of the Income Tax Act 1961.

Listing of the Bonds

Bonds will be listed within 15 days of closing of issue on both NSE and BSE, and there is no lock in on them so you can trade them in the secondary market immediately after listing.

Secured Issue

These are secured bonds which means that if REC goes insolvent, these bondholders will be paid before unsecured creditors. This doesn’t however guarantee full payment, and is no other form of guarantee either. In the past I’ve seen some people confusing a secured issue to mean something equal to a government guarantee that come what may, I will pay you money, and that’s not the case.

Who are Category IV Retail Investors?

There are four categories of investors for these bonds and the last category of investors which is the retain category get a slightly higher interest rate(half a percent). A retail investor is someone who invests less than Rs. 10 lakhs in these bonds.

Credit Ratings

This bond issue has got very high rating, and that’s not surprising given REC’s financial standing. They have been rated CRISIL AAA/Stable by CRISIL, CARE AAA by CARE, IND AAA by IRRPL and ICRA AAA by ICRA. These are the best credit ratings that these companies assign and denotes excellent credit standing per the credit rating companies.

When will interest be paid?

This information will be useful next year when people are looking for interest payments, and the interest on the REC tax free bonds will be paid once a year on December 1st.

Is there a step down feature?

A step down feature means that the rate of interest that you get if you buy the bonds from the stock exchange is lower than what you would get if you were the primary allottee when the company issued the bonds. It exists with this issue so you will get a lower rate compared with what you get if you subscribe to the issue now directly with the company. The lower rate is half a percent lower, which is basically the premium retail investors are getting.

How does this issue compare with listed bonds?

In terms of pricing, the quick check I did on the prices indicate that these bonds are better especially if you include the transaction cost, but I do need to dig deeper in this aspect and I’m sure a good discussion will ensue in the comments section so I will either update the post with that information or do a second new one.

What listing gains can I expect if I flip these bonds upon issue?

I have no idea.

Where can I get the REC bond application form?

You can get it at your local bank, and if you are going to apply online using ICICI Direct or Kotak or any other broker then they will have it. If you can’t find it and want one then here is a link to the bonds that AK Capital created for Shiv as sub broker, so the incentive charged will go to him. This doesn’t however mean you pay anything extra. For more info or to invest in Tax-Free bonds in Delhi/NCR, you can contact Shiv at +919811797407


I think tax free bonds are a good thing to have for most people in the 20% or 30% tax bracket, which ones doesn’t matter that much. They are all quite similar as far as ratings goes and interest rate goes. I would say that it is always better to buy them from two or three different issuers so in case something does go wrong, all your money is not invested with just one company.

All you ever wanted to know about CIBIL Credit Scores

This post is written by the CIBIL Consumer Relations team.

I’ve been in touch with CIBIL to help put together a comprehensive FAQ and they’ve been gracious enough to send an extremely detailed post on the usual questions that people have about CIBIL and will also be answering any questions that you may have. Please go through the FAQ written by the CIBIL team themselves, and post any questions that you may have.

1.      What are the different factors that affect your credit score?

An individual’s credit score is calculated based on the information in the “Accounts” and “Enquiries” section of the CIR. There are various attributes that go into developing the score. Major factors are:

  • Credit Utilization: How much credit are you using? Are there are too many high balances, outstanding etc?
  • Defaulting: How many accounts are past due – how much and by how many days? What is the account status? Is it written off or closed or settled etc?
  • Number of enquiries: Every time you look for additional credit through multiple lenders, an enquiry is made by those lenders to access your credit score. So it is not the most prudent practice to just shop around (i.e. fill up multiple loan application forms) to enquire about loan rates & eligibility from multiple lenders. As all this is reflected in your CIBIL report and gives an indication that you are “credit hungry”.
  • Type of credit availed: How old is the loan account or credit card account?  What type of credit do you have?  Is it secured or unsecured? Do you have a good mix or balance of credit or is it all credit cards /personal loans?

2.      Which factor has the maximum weightage on your credit score?

The CIBIL TransUnion Score is derived after keeping multiple factors in mind. The payment pattern (across loan categories) plays a crucial role in determining the credit score. But this should not be looked in isolation when you are trying to improve your Credit score. Do keep the factors listed above in mind to ensure your overall credit health improves and thereby improving your chances of getting a loan/credit card.

3.      What is the difference between the CIR that you can buy for Rs. 154/- and the CIBIL TransUnion score for which you pay Rs. 470/-?


A CIR or the Credit Information Report contains all your credit details from across Banks and financial institutions. This is a summary of your credit history and based on this, the CIBIL TransUnion Score is derived.

But by paying Rs 470/- you not only get the CIR but the CIBIL TransUnion Score as well. Just to give an analogy, a CIR is like a report card but a CIBIL TransUnion score is like the overall marks/grade that you get. It distills all the information in a CIR and returns a score value which quantifies your credit and financial health.

So by just looking at your Credit Score you can get a quick and better sense of your financial standing. It not only gives you an overview as to how you compare vis-à-vis other prospective borrowers but also helps you better understand your chances of loan approval because the credit score is the first credit screening tool used by a lender.

f your credit score is high, they then start the process of evaluating your loan application. It is important to know that 80% of the loans approved are for individuals with a credit score of above 750. With just a CIR you will not be able to effectively gauge your chances of loan approval in the manner the CIBIL TransUnion Score (and CIR) can.

4.      What does DPD stand for? What does it mean when DPD is 000 and what does it mean when it has a number next to it?

DPD stands for Days Past Due. This is reflected in your Account Summary section under Payment history of your CIBIL report. There is a due date by when the payment should be made for every Loan EMI/ Credit card bill. DPD indicates deviation, if any from the payment cycle. This plays an extremely critical role and should be monitored regularly. Anything other than “000” or “STD” is considered negative by the lender. Below are the types of asset classification that can appear in the DPD section:


DPD Denotes Explanation
STD Standard Payments are being made within 90 days
SMA Special Mention Account Special account created for reporting Standard account, moving towards Sub-Standard
SUB Sub-Standard Payments are being made after 90 days
DBT Doubtful The account has remained a Sub-Standard account for a period of 12 months
LSS Loss An account where loss has been identified and remains uncollectible

On occasion you may also notice “XXX” reported for your DPD on a certain account which implies that information for these months has not been reported to CIBIL by the Banks.

If there is a number in the DPD column, then it means that the payment is late by that many days. So for example if it is 050, then it means the payment is late by 50 days. If it is 000 then it means the payment is as per the due date, so there is no deviation or late payment.

5.      How long does it take for records in CIBIL to get updated after I clear a credit card that’s gone for settlement?

First of all, it is commendable that you have taken the first step towards improving your credit health by clearing the dues. Once the payment has been made, the same will reflect in our records once the concerned credit institution updates us with this information. This is normally done on a monthly basis and you start building a positive credit history. Once the CIBIL records are updated, you will notice your CIBIL TransUnion Score will gradually start improving over time (provided everything else is on track as well). But do not expect the change to happen overnight. Just ensure you continue to monitor your credit health and be diligent about your credit payments and you will notice a positive change in the months to come.

6.      It seems that a credit card going into settlement is a major negative factor, what can I do to improve my credit score if I’m already in this situation?

Yes, a credit card going in to settlement is viewed negatively by lender and impacts your credit score unfavorably. But don’t be disheartened, you can start improving your credit score by simply paying off your debt and not opting for more until your score improves. Also, don’t forget to follow the simple guidelines stated below:

  •  Repay your loans on time. Financial discipline coupled with prudent credit management and a good payment history will ensure that you enjoy all the benefits associated with having a good credit record
  • Making your payments on time will have the most significant impact on your credit record. It is important for you to maintain appropriate, reasonable and affordable levels of credit and ensure regular and timely re-payment of loans
  • Keep your total debt under control. If your total borrowings are significantly high, use some of your savings to repay some of your debt where possible.
  • Investigate your options in order to reduce your interest and other credit related costs, to make your debt burden easier to manage
  • When you are seeking a new loan or credit card, do it in a relatively short amount of time. You don’t want to have your report show that you are constantly looking for credit!


7.      On my credit report, I see that some credit cards are listed as “settled” whereas some others are listed as “written off”, what is the difference between the two?
Settled means where you would have made part-payment (in consent with the lender) against the total outstanding. Once this part-payment has been done that means there is no outstanding against your name by that lender. You will notice your amount over due and current balance would have changed to zero.

When you are not able to make payments against the outstanding loan/credit card amount for more than 180 days, the lender is required to “write-off” the amount in question. The lender then proceeds to report this on your CIR.

Some lenders (as per their credit policy) when enquiring an individual’s CIBIL report may not grant loan/credit card to those individuals whose accounts have been settled or written-off. It is always advisable where possible to have a clean account status.

8.      If I have a credit card and I don’t use it at all, does that affect my credit score in any way at all?

It depends on the other credit accounts you have. If you already have many credit cards and loans then it is advisable to close it. But if you just have a one or two credit cards, then there is no negative impact on the credit score. On the contrary there can be a positive impact, as it shows under-utilization of credit (as long as your credit limit is not used). But ensure you continue to monitor the credit card despite the fact that you are not using your card. As many a times, credit cards come with an annual fees etc which may miss your attention as you are not tracking or using that card. This may result in non-payment which can then have a negative impact on your credit score. It is advisable to be vigilant and monitor your credit report on a regular basis.


9.      I have a score of more than 750, and I’m still not getting approved for a credit card, what can I do?

Purchase your updated CIBIL TransUnion Score (and CIR) and check for the following points-

  • Check if Account status for any account is written off or settled- If there is then (where possible) pay off the debt and regularize the account.
  • Check for outstandings or payment irregularities- Check if you have missed any of the payment and the outstanding balance has increased. We recommend you to pay the balance at the earliest.
  • Check if there is high utilization of existing credit cards i.e., if there is maximum utilization of the credit card limit set against the cards. If this is the case then you can start by paying off your balances as and when you can to keep the overall utilization less.  Also moderate the use of credit to the extent possible.
  • Check if you are over-leveraged when compared to your income- Typically your total borrowing capacity is 50% of your net monthly income. If the current EMI is already 50% or more, then first pay-off your existing debt before applying for new credit.
  • Check with the lender for the reason your credit card is not approved and then look for areas of improvement/correction.


10.   How much time does it take to get rid of the effect of one default? I defaulted and cleared off my credit card in 2011 but my score is still low.

If you have cleared off your dues don’t forget to check your CIBIL report again to ensure the credit card issuer has updated the revised status of your account with us. Go through your CIBIL report in detail to ensure everything mentioned is accurate and your other payments are being made as per schedule. It is also advisable to avoid any new credit till your credit score has improved. Once everything is in order, you will notice that your CIBIL TransUnion score will gradually start improving.



How can an Indian investor buy shares of a foreign company?

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at

Certain things look a little complicated till they are done for the first time. Investing in stocks of foreign companies, like Apple, Google or Facebook, is one of those. It seems very complicated but it is not so.

A few days back Manshu had written a post on how NRIs can invest in the Indian stock market. CA Karan Batra wanted to have a similar post on how Indians can invest in shares listed on NYSE.

Here is what he had to say:

Hi Manshu

Very informative post on how NRI’s can invest in India.

I would highly appreciate if you could author another post on How Indian’s can invest in Shares listed on the New York Stock Exchange. I heard that its possible for Indians to invest in Shares listed on NYSE but not sure about how to invest..

These days, every other financial advisor advises his/her clients to diversify across asset classes and across markets. Some investors in an attempt to diversify their portfolios do not mind to experiment and desire to have information regarding the procedure.

So, here is my attempt to share the required information with our readers.

Open a trading account

Like you open a trading account here in India with a broking company to invest in shares listed on NSE or BSE or any other stock exchange, you are required to follow a similar process to open a trading account with an Indian broking house to invest in shares of some foreign companies listed on the stock exchanges of their respective countries.

How do I open a trading account to invest in International Capital Markets?

To facilitate you to do the same, an Indian stock broker enters into a tie-up with a foreign broking partner who has the license to act as an intermediary and execute the trades on your behalf in the foreign markets.

The Indian stock broker will act as an introducing intermediary between you and the foreign broking house. The Indian stock broker will also help you in getting your account opened and completing the formalities of Know Your Customer (KYC) applicable for that country.

You just need to fill an application form and provide your identity proof such as passport or PAN card and residential address proof such as Voters ID card or latest bank statement as the documents required to open an account.

Once your necessary details are registered, you will be provided the bank account details of the foreign broker to which funds are to be transferred. You will also get the contact details of the account executive who will take care of your account in case you require any kind of assistance.

Funds Transfer – Pay-In/Pay-Out Process

As per the remittance norms of the Reserve Bank of India (RBI), an Indian citizen can remit a maximum of USD 2,00,000 in a financial year, from any of the authorised banks in India, including for investments in international capital markets.

To remit funds to the foreign broker’s bank account, you will be required to visit your bank branch, duly fill Form A2 and submit it there along with your PAN card copy.

The foreign brokers accept funds originating from your bank account only and will reject any third party fund transfer. Also, they do not accept bankers drafts, cheques or cash deposits either.

To get your money back, you need to fill “Bank Transfer Request” (BTR) form online and send it to the foreign broker. Once the payout request is acknowledged, the amount will be credited to your bank account.

It takes around 24 to 48 hours to remit money from your bank account to your trading account with the foreign broker and around 48 to 72 hours from your trading account to your bank account.

You may remit funds in one of the many global currencies from your bank account to your trading account but you need to decide the base currency in which you want to settle your transactions. So, if you set USD as the base currency in your account, then all stock exchanges which accept payments in USD will settle your transactions in USD automatically.

For your trades on other exchanges, which do not accept payments in USD, the foreign broker will convert your base currency, USD in this case, to the currency of that exchange at the market rate to execute the transaction.

Once your account is opened and funds are transferred, you will be provided a client Login ID and password to have an immediate access to the foreign broker’s trading platform to buy and sell shares of the listed foreign companies. All dealings like trading, delivery of shares/funds etc. will be done directly with the foreign broker without any involvement of the Indian stock broker.

Demat Account

Unlike here in the domestic markets, where your bought shares get transferred into your demat account in T+2 days, when you buy shares in the foreign markets the shares remain in a pool account with the broker’s custodian but start reflecting in your trading account immediately after buying.

Unlike with most Indian brokers, margin trading and short selling will not be allowed with a foreign broker. You will be able to buy shares only when there is sufficient cash in your account and sell shares only when you already hold them.

You can have the access to all your transactions, account history and ledger balance on the trading platform. You will also get the contract notes for your executed trades in your mailbox.

Which brokers are providing this facility here in India?

Only a few Indian broking companies like Kotak Securities, ICICI Direct, India Infoline, Reliance Money and Religare, are offering these trading services to Indian investors.

In 2007, ICICI Securities became the first company to have a tie-up with US-based broking firm, Penson Financial Services, for its overseas trading platform with access to NYSE Euronext and Nasdaq.

While Kotak Securities has a strategic agreement with Singapore’s Saxo Capital Markets, the capital markets arm of Denmark-based Saxo Bank, India Infoline has such relationship with US-based Interactive Brokers, LLC. Reliance Money also has such an arrangement with US-based optionsXpress.

Kotak Securities provides access to 24 international stock exchanges through its trading platform “Kotak Trader”. These exchanges cover all the big markets and almost all the big stock exchanges including New York Stock Exchange (NYSE), Nasdaq, London Stock Exchange (LSE), Australian Stock Exchange (ASX), Hong Kong Stock Exchange (HKEX) and Singapore Exchange (SGX) among others. Here is the link to check the markets you can trade in with Kotak Trader.

You can transact on over 80 international stock exchanges with India Infoline whereas, ICICI Securities and Reliance Money facilitate you to transact only in the US markets.

Kotak Trader offers trading in equity markets, ETFs, ADRs, GDRs and REITs through 100% cash and carry system. But, this service is available only for individuals. Partnership firms, HUFs, trusts, NRIs, corporates etc. are not allowed to open an account with Kotak Securities for their overseas investments.

Different companies require different minimum amount to open a trading account. Kotak Securities require you to make an initial deposit of USD 10,000 or INR 5,00,000, whichever is higher, within a period of 3 months from the date of account opening. With India Infoline also, this amount is USD 10,000 but ICICI Direct and Reliance Money allow you to trade with a minimum initial deposit of USD 1,000.

Kotak Securities charges Rs. 750 to open such an account and 0.75% of the trade value as the brokerage, while ICICI has an account opening fee of Rs. 999 and the transaction charges of USD 9 or 0.75% of the trade value, whichever is higher. India Infoline does not have any account opening charges.

As your overseas investments will be made in some foreign currency, your investment gain or loss will also be linked to the movement of that currency. So, if you invest in some stocks in USD and USD appreciates in value, then it would add to your gains or lower your losses. e.g. Suppose you paid Rs. 50 per USD at the time of investment and liquidate your investment when the USD appreciates to Rs. 55, you will get back Rs. 55 per USD.

The process of transacting in equity markets overseas is not that complicated, but you need to understand the dynamics of global equities. You can understand the revenue sources for Bharti Airtel in India but it is difficult to do so for SingTel in Singapore.

There are some other ways also in which you can invest in overseas markets; I will do another post to cover those options.

Best Indian Gold Fund in 2012

As we come close to the end of the year and gold has another great year, it’s only natural to do an update on the best gold funds in India.

In the past I’ve called these posts, best gold ETFs but now there are so many fund of funds that I’ve called this year’s post the best Indian gold fund and will include both gold ETFs and fund of funds. There are no gold mutual funds in India perhaps because it is not easy to run a mutual fund with gold as the underlying asset as you would require physical gold sales and purchases virtually every working day.

I have combined gold ETFs and gold mutual funds mainly because they both invest in gold, and theoretically gold ETFs should return higher than gold fund of funds but I’d like to see if there are any gold fund of funds that are doing better than gold ETFs and if that’s the case then it shouldn’t make any difference whether you buy a gold ETF or a gold fund of fund.

I say that gold ETFs should do better than gold funds because gold funds in India invest in gold ETFs of their fund house and have expenses over and above the gold ETFs own expenses so the expenses are charged twice. However, if a fund has low expenses and the fund house is doing a good job managing its funds it is possible that some funds are doing better than even the ETFs.

That being said, here is a table that shows the returns for all of these funds in the last one year. All data from Value Research.




ETF (E) or Fund of Funds (F)

1 Year Return

1 SBI GETS E 11.62%
2 Religare Gold ETF E 11.59%
3 Reliance Gold ETF (R*Shares Gold ETF) E 11.51%
4 UTI Gold ETF E 11.50%
5 Quantum Gold ETF E 11.49%
6 HDFC Gold ETF E 11.48%
7 ICICI Prudential Gold ETF E 11.48%
8 Kotak Gold ETF E 11.47%
9 Goldman Sachs Gold ETF E 11.47%
10 IDBI Gold ETF E 11.44%
11 Birla Sun Life Gold ETF E 11.33%
12 Axis Gold ETF E 11.30%
13 Quantum Gold Savings F 10.78%
14 Axis Gold F 10.36%
15 Reliance Gold Savings F 10.33%
16 SBI Gold F 10.33%
17 Kotak Gold F 10.15%
18 ICICI Prudential Regular Gold Savings F 10.02%
19 HDFC Gold F 9.89%
20 Religare Gold F Less than a year old
21 Birla Sun Life Gold F Less than a year old
22 Motilal Oswal Gold ETF E Less than a year old
23 IDBI Gold F Less than a year old
24 Canara Robeco Gold ETF E Less than a year old
25 Canara Robeco Gold Savings F Less than a year old

There are two clear trends that you can discern looking at the table above:

1. All ETFs have performed more or less similarly, and there is very little difference in their returns. If you look at some of the earlier posts on the best gold ETFs even there you will notice that as far as returns are concerned, there are no clear winners.

2. Fund of fund returns are lower than ETF returns because they have an additional layer of cost. However, what these figures don’t show is the transaction cost of ETFs and mutual funds, and that can make a difference to your returns because you could be buying mutual funds for free whereas you will always need to pay the broker for buying ETFs.

Fund of funds also make it easier to set up a SIP for a gold ETF. You can very well do that with an ETF as well, but it won’t be automated and simple to the extent of a mutual fund.

Do gold ETF volumes matter?

In the past I’ve said that since performance of gold ETFs is about the same, you can look at volumes and invest in the ones that have the most liquidity but in the past few years gold funds have grown so much that for retail investors this parameter has really become irrelevant.

Now, I would say it is hard to say which is the best gold ETF or fund of fund and it really depends on what you are most comfortable with. If you are okay with the lower return that fund of funds give in lieu of no transaction costs and convenience of a SIP then go for fund of funds.

If your transaction costs are low trading shares because of quantity or because of the broker you use, then buy gold ETFs.

Whatever you do, I think it’s best to spread your money around and use two or more fund houses instead of just one. If there is a big tracking error any year in any of the funds then spreading your money can help with that but other than that I don’t see any reason why gold ETFs should perform any differently in 2013 than they have done this year or the years before this.

Follow up on Gift Tax Post – Clubbing of Income

A few days ago Aashish Ramchand had a guest post here on income tax on gifts, and Manikaran Singal had the following comment on the post.

Manikaran Singal November 22, 2012 at 10:58 am [edit]

Just to add , Gift tax provisions has to be read in conjunction with the clubbing provisions which are detailed u/s 60-64 of income tax act 1961. These sections deal with the cases where tax payers make an attempt to reduce the tax liability by transferring / gifting their assets in favour of family members or by arranging their sources of income in such a manner that tax incidence falls on others, but in actual the benefit of income enjoyed by them. one needs a proper tax planning at every life stage by understanding tax provisions simultaneously. I’ve written a series of articles on tax planning at different life stages, hope it benefit the readers
Even one article on FPGI by me also throws light on this issue

I thought this was a very useful comment as the original post talks about the tax implication of the gift tax money but then when you read about clubbing provisions, you get to know about the tax implications of the earnings arising out of the money that the gifted money generates.

This is an important thing and I think reading Mani’s gift tax post gives a very good perspective about the whole process of gifting and then the tax provision on the incomes arising out of that.

Gift Tax and Clubbing of Income

The main thing that stood out for me with respect to gift tax is that if you gift money to your minor child, spouse or daughter in law, and then they invest and earn more than Rs. 1,500 in a year then that income will be clubbed with your income and you will be taxed on it according to your tax rate.

Here is the whole post.

Spreading the Income: Golden Rules to Save Tax

Photo Credit:


Section 66A, Gaza Ceasefire and Entrepreneurshit

The Hindu reported that a PIL (Public Interest Litigation) has been filed that Section 66A was against the freedom of speech guaranteed under the Constitution.

I hope this PIL gets more publicity, more people learn about it and something good comes out of it because the way the law is drafted right now just gives too much room for interpretation.

Next, The Economist on the ceasefire in Gaza.

I liked this post about how much hard work it takes to create and build wealth, and some parts of the post really resonated well with me. When you work seven days a week, the real worry you have is whether you are investing your time in the right thing or not because that’s one commodity that’s never going to come back.

Nassim Nicholas Taleb has a good essay on learning to love volatility.

Mark Suster wrote a very inspiring post titled Entrepreneurshit that resonated with a lot of people and even if you’re not interested in entrepreneurship, this great post is worth your time.

The Economist again, this time on Watson, the computer that beat the hell out of the best humans that played Jeopardy.

Finally, three essential photography tips from National Geographic.

Enjoy your weekend!


Use Google Calendar to track your monthly payments

I spent the last hour noting down all my recurring monthly expenses in Google Calendar after I forgot to pay two bills this month, and finally admitted that I can’t keep it all in my head all the time and be okay.

I started using Google Calendar because of two main reasons – you can synch it with your phone to get reminders and you can create recurring events that go on forever.

In the end however, there were four things that I found answers for, and I feel this is the best and easiest way to keep track of these four questions.

  1. What are the recurring payments that I have to make every month?
  2. When are each of these due?
  3. If they are automatically charged, which credit card or bank account do they use?
  4. What is my monthly recurring expense?

 Set up Google Calendar Events

The first step is to log in to your Google account and go to Google Calendar. After that click on the ‘Month’ view on the top right of the calendar to make it easier to add events.

Once you see the view, you can enter three pieces of information about every event.

  1. What the bill is about?
  2. How much is charged?
  3. Where it is deducted from?

I did a few sample entries, and after you make all entries, your calendar should look like this (click to enlarge).

Remember, while adding an event there will be a bold blue hyperlink ‘Edit event’ and you need to click that to open up another screen that allows you make this event recurring.

This is really important because if you don’t make it a recurring event you won’t get any reminders and it will also be difficult to view it all at one place a few months down the line.  You can make this event a repeating event by selecting the Repeat checkbox and then filling out the detail.

Once you enter the Calendar events like this you can very easily sum up all the expenses in the month and arrive at your monthly recurring expenses. I don’t use Google Calendar for anything else, so setting it up for this was quite good for me and I’m sure it has set me up to where I don’t miss any future payments just because I forgot them.