Zerodha Fund House

How does adding Gold impact your portfolio? Gold has historically exhibited a low correlation to equities. We examined how adding gold to a portfolio—using allocations of 10%, 20%, and 30% gold— would have impacted it. The findings: Allocation to gold reduces maximum drawdowns and without significantly impacting the returns. Here, Maximum Drawdown is the largest fall your portfolio has experienced from its highest point to its lowest point, helping you gauge how resilient your portfolio is to downturns. For example, a portfolio with 70:30 allocation to Equity and Gold respectively would have resulted in a maximum drawdown of ~ -26% as compared to 100% allocation to equity which had a maximum drawdown of ~ -38%. Ultimately, choosing the right portfolio mix depends on individual risk tolerance and goals, but adding gold may enhance portfolio resilience. You can check our blog in the comment section for more information.

Ask Me Anything on Gold as an Asset Class. In India, there has always been a deep-rooted affinity for physical gold, whether for consumption or investment. However, I believe that in the coming years, the investment demand for gold will increasingly shift towards mutual fund products. However, there's still much work to be done in terms of educating investors about these products—and that’s where I aim to assist. Feel free to ask me anything about Gold as an Asset Class and I will do my best to answer as many questions as possible.

Add Glitter to Your Portfolio ✨ Introducing our Gold Fund of Fund– Zerodha Gold ETF FoF! This fund invests in units of Gold ETF, offering you a hassle-free way to gain exposure to gold without the need for physical storage or worrying about its security. It's a simple and fully digital way of adding pure gold of 99.5% or more purity to your investment portfolio. This fund allows you to invest systematically in gold via Systematic Investment plan (SIPs) making it easier to build your gold portfolio over time. Investing in gold offers an opportunity to diversify your portfolio, as it has historically been viewed as a reliable hedge against inflation and market fluctuations. 📅 The New Fund Offer (NFO) is now live. You can invest in Zerodha Gold ETF FoF’s NFO from all major mutual fund platforms.

Can a 250 rupee SIP make mutual funds more accessible?

Investors from smaller cities are leading the way! Over 50% of all live SIP accounts in the mutual fund industry now come from smaller cities and towns (B-30 - Beyond the top 30 cities). Also, the growth in SIPs in Index Funds viz., 18.7% is higher than any other category of schemes in the industry from B-30 cities (As per AMFI data mentioned in the comment section). At Zerodha Fund House, we’re proud to align with this growth by offering simple products. With investors from around 15,000 pin codes across the country, we’re excited to help even more people investing through mutual funds.

It is interesting to see that the majority of folks considered expense ratio as the most important factor before making their last equity index fund investment. Firstly, it helps to carefully consider your financial goals, risk-return profile, and investment time horizon before making any investment decision. When it comes to equity index funds, you may consider these two factors as a starting point to choose a fund that aligns with your investment objectives. 1. 𝐂𝐡𝐨𝐢𝐜𝐞 𝐨𝐟 𝐄𝐪𝐮𝐢𝐭𝐲 𝐈𝐧𝐝𝐞𝐱: An equity index is a basket of securities that represent and measure the performance of the overall market or specific segments within it. There are different types of equity indices available such as: 1. Broad Based Indices: Market indices that are diversified and represent the broader stock market. 2. Sectoral Indices: Market indices that represent a specific sector of the stock market such as Banks, IT, Automobile etc. 3. Thematic Indices: Market indices that represent various sectors but have the same theme such as EV, Tourism etc. 4. Strategy Indices: Market indices designed on the basis of quantitative models. For ex: Smart Beta indices that are based on factors such as value, momentum, quality etc. Broad based indices offer diversified exposure to the stock market. In case you are looking to take a tactical bet into one specific sector or theme, then you may choose a thematic/sector specific index. 2. 𝐓𝐫𝐚𝐜𝐤𝐢𝐧𝐠 𝐄𝐫𝐫𝐨𝐫: Tracking error is defined as the annualized standard deviation of the difference in returns between an Index fund/ETF and its benchmark. In simple terms, it means how closely the fund tracks the index on a daily basis, ideally it should be as low as possible. If the scheme does not replicate the underlying index as accurately as it should, this would automatically lead to a higher tracking error and hence a higher difference in returns. In passive schemes such as Index Funds/ETFs, Tracking error is the overarching parameter that considers the impact on the fund due to:   1. Total Expense Ratio (TER): Higher the expense incurred in managing the fund, higher may be the tracking error 2. Change of Index constituents: Frequent changes would lead to frequent rebalances and hence a higher cost 3. Factors such as cash balance maintained, subscriptions/redemptions, etc can have an impact on Tracking Error

Why is asset allocation important? Our CEO, Vishal Jain explains the need for having an asset allocation strategy and how it can help investors.

Are you just starting your investment journey? If yes, then we have something for you👇🏼

AMA on Index Funds and ETFs For the past 25 years, Index Funds and ETFs have been my bread and butter. I’d like to contribute to the passive investing community by clearing up any confusion around these products. Feel free to ask me anything about Index Funds and ETFs in the comments below, and I’ll do my best to answer as many questions as possible! :)