The first ever SGB – Sovereign Gold Bonds 2.75% NOV 2023 Tr-I was issued on 26 Nov 2015, listed as SGBNOV23 on NSE and 800251 on BSE, with ISIN IN0020150085.
It paid an interest of 2.75% every 6 months until it matured on 30 Nov 2023.
SGB 2015-I Patriculars | Amount (Rs) | Taxability |
---|---|---|
Issue Price on 26 Nov 2015 | 2,684.00 | No |
Interest @2.75% every 6 months = 36.91×16 | 590.56 | As per slab |
Redemption Price on 30 Nov 2023 | 6132.00 | Tax Free |
Headline Return | 128.46% |
---|---|
XIRR (for 30% tax bracket) | 12.28% |
How did it fare compared to other assets or mutual funds? From the point of view of absolute returns, XIRR, cost (brokerage, TER) and taxability.
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Among the ones I track: So XIRR (Pre Tax) of SIP and lump-sum in the following Indices from 01/05/2015 are as follows:
Nifty 50 – 14.86% SIP and 12.57% Lumpsum
Nifty Midcap 150 – 21.03% SIP and 18.5% Lump-sum
Nifty Small Cap – 19.78% SIP and 15.25% Lump-sum
So Post Tax, NIFTY 50 would fetch lesser returns than SGB.
I have not really been tracking other Asset classes like Crypto or Real Estate.
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Not an expert, since gold is linked to USD, the currency depreciation could have its effect as well.
on 26.11. 2015 INR to USD was 66.36.
On 30.11.2023 INR to USD was 83.34
The currency depreciation was 25.58%.
How much of headline return of 128.46% as the author says can be contributed to currency depreciation of INR.
I could be totally wrong. Can we really compare Gold with other asset classes as this is mainly used as a safe haven for diversification. Found an article which compares Gold return vs Nifty
I have a question for the experts here.
RBI conceived the idea of Sovereign Gold Bond (SGB) with the underlying thought that when an investor invests in these bonds he will not buy physical gold. This will help in reducing gold imports and the entire cycle that comes with it i.e. buying gold with the depreciating rupee, fiscal deficit, etc.
Now that the first SGB has completed its full life cycle,
- Were physical gold imports reduced or increased due to SGB in the last 8 years?
- Do Indians continue to buy gold in physical form compared to the pre-SGB era?
- How well did the Govt utilize the SGB amount in the 8-year lock-in period? Did it earn enough to repay the 128% return to the investors at maturity? Is this sustainable for the Govt?
P.S.
Following are the SGBs that will mature in 2024.
Symbol NSE | Symbol BSE | Interest per annum | Interest payment dates | Maturity Date | Issue price |
---|---|---|---|---|---|
SGBFEB24 | SGB2016I | 2.75% | 8th February and August | 08-Feb-24 | 2600 |
SGBMAR24 | SGB2016II | 2.75% | 29th March and September | 29-Mar-24 | 2916 |
SGBAUG24 | SGBAUG24 | 2.75% | 5th August and February | 05-Aug-24 | 3119 |
SGBSEP24 | SGB2016IIA | 2.75% | 30th September and March | 30-Sep-24 | 3150 |
SGBNOV24 | SGB2016IIIA | 2.50% | 17th November and May | 17-Nov-24 | 3007 |