Investing in Sovereign Gold Bonds and AI Space: Expert Insights by Shweta Rajani

Key Takeaways:

1. Sovereign gold bonds have provided significant returns, with a 128.5% gain over eight years, and offer tax benefits on the appreciation in gold prices.

2. Investing in the AI space through AI-focused mutual funds provides diversification and professional management expertise.

3. The global AI space is witnessing momentum, with advancements in AI research and its potential impact on various sectors.

4. Tech sector funds may provide exposure to AI, and investors can gain AI theme exposure through diversified mutual funds.

5. Diversification within the AI space is recommended, with AI-focused mutual funds offering benefits over individual stock selection.

Shweta Rajani, the Mutual Fund Head at Anand Rathi Wealth, has provided valuable insights into the benefits of investing in sovereign gold bonds and the potential of the AI space. Let’s break down the key points and address the questions raised in the provided text.

Benefits of Sovereign Gold Bonds

Shweta Rajani highlights the benefits of investing in sovereign gold bonds, emphasizing the returns and the impact of taxation. Here are the key points:

1. Returns: She mentions that investors have gained significantly from sovereign gold bonds, with a return of 128.5% over a period of eight years, slightly more than a 12% compounded interest. She also explains that the actual pure gold return could be just 50%, with the rest attributed to rupee depreciation and the additional coupon received.

2. Taxation: Rajani discusses the taxation benefits of investing in sovereign gold bonds. She explains that the interest income is added to the total income and taxed at a marginal tax rate, while the appreciation in the gold price is tax-free.

3. Comparison with Equity: She compares the performance of sovereign gold bonds with that of large-cap funds over an eight-year period, highlighting the benefits of compounding from equity investments.

4. Primary vs. Secondary Market: Rajani explains the differences in returns and taxation between buying sovereign gold bonds in the primary market versus the secondary market.

Investing in the AI Space

Rajani also provides insights into investing in the AI space, particularly through AI-focused mutual funds. She emphasizes the benefits of diversification and the expertise of professional managers in navigating the AI sector.

Momentum in the Global AI Space

Rajani discusses the momentum in the global AI space, highlighting the advancements in AI research and its potential impact on various sectors, including technology, banking, auto, pharma, and others.

How to Place Bets in the AI Space

She addresses the momentum in the AI space and how fund managers are gradually increasing their exposure to technology, particularly in companies developing AI. She also mentions the usage of AI in sectors such as banking, auto, pharma, and personal finance.

Sector Funds and Exposure to AI

Rajani explains that while there are no specific AI-based theme funds, tech sector funds may provide exposure to AI. She suggests that investors can gain exposure to the AI theme through diversified mutual funds, as fund managers may go overweight on sectors related to AI in their diversified funds.

Diversification within Equity in the AI Space

Rajani recommends AI-focused mutual funds for diversification within the AI space, highlighting the effort required for individual stock selection and the benefits of professional management.

Conclusion

Based on Shweta Rajani’s insights, investing in sovereign gold bonds can provide attractive returns and tax benefits, while investing in the AI space through AI-focused mutual funds offers diversification and professional management expertise.

FAQ

Q1: What are the benefits of investing in sovereign gold bonds?

A1: Sovereign gold bonds have provided significant returns, with a 128.5% gain over eight years, and offer tax benefits on the appreciation in gold prices.

Q2: How can one invest in the AI space?

A2: Investing in the AI space through AI-focused mutual funds provides diversification and professional management expertise.

Q3: What is the momentum in the global AI space?

A3: The global AI space is witnessing momentum, with advancements in AI research and its potential impact on various sectors.

Q4: Are there specific funds dedicated to the AI space?

A4: While there are no specific AI-based theme funds, tech sector funds may provide exposure to AI, and investors can gain AI theme exposure through diversified mutual funds.

Q5: How can one diversify within the AI space?

A5: Diversification within the AI space is recommended, with AI-focused mutual funds offering benefits over individual stock selection.