Kotak Mahindra Asset Management Company announced the launch Kotak Gold Fund — a fund of fund. The fund will allow investors to take exposure in gold without having a demat account.

The minimum ticket size through the lump-sum route will be Rs 5,000. Investors also have the option of investing Rs 1,000 a month through the SIP route.

Kotak Gold Fund will be open for subscription on March 4 and will close on March 18. The fund's performance will be benchmarked against the price of physical gold.

The scheme will predominantly invest in units of the Kotak Gold Exchange Traded Fund (ETF). The investment objective of the scheme is to generate returns by investing in the units of Kotak Gold ETF.

Tax benefits

The Kotak Gold Fund has the benefit of long-term capital gains tax after one year of investment. This is in contrast to physical gold where you have to pay short-term capital gains tax for a period up to three years. Also, the returns of this fund do not attract any wealth tax, which is not the case with physical gold.

“We see a lot of potential with Kotak Gold Fund primarily because of two significant factors. One by providing a platform to investors to invest in gold without a demat account and also create a discipline by systematically investing in gold as an asset class,” said Mr Sandesh Kirkire, Chief Executive Officer, Kotak Mahindra Asset Management Company.

The entry load of the fund is nil, but there will be 2 per cent exit load if the investor chooses to redeem or switch out within six months from date of allotment.

Reliance Mutual Fund had launched its Gold Savings Fund in February, the New Fund Offer for which closed on February 28.

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