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Spot gold tested a new lifetime high last week due to a combination of factors that have converged to propel the demand for the yellow metal. Multiple catalysts like US rate cut speculation, China's economic stimulus, and renewed geopolitical tensions attributed to the rise in prices. Prices on the London spot market surged near to the psychological level of $2500 an ounce, gaining almost 17 percent so far this year. Domestic prices also gained momentum with the key MCX futures prices surpassing Rs 74000 per ten grams. The recent economic release from the US has fuelled optimism that the US Federal Reserve might cut interest rates two times this year. However, the latest Federal Reserve meeting minutes indicated apprehension from policymakers about inflation and rate cut expectations are postponed. A cut in interest rates will cause lower yield for dollar-denominated assets which can lead to a decline in the value of the US dollar. Rising geopolitical tensions in the Middle East and heightened tensions between Russia and Ukraine also bolstered the safe-haven demand for the commodity. The recent Gaza conflict has caused significant tensions in the Middle East, especially since the hostility between Israel and Iran is at its highest. Last week, Russia announced it has started tactical nuclear weapons exercises near Ukraine further escalating tensions in the West. Geopolitical tensions play a crucial role in shaping market sentiment and influencing the price of gold. As a tangible asset that holds intrinsic value, gold often becomes a preferred investment during times of uncertainty, driving its price upwards. Expectations of a moderate global growth forecast insisted investors rely on gold. The global GDP growth is projected at 3.1%, little changed in 2024 from the 3.1% in 2023. There are estimations of a decline in developed economies like Germany, Japan, and the UK this year. In addition, persistent worries over China's economy forced investors to buy gold as a hedge against inflation. A weak global economy drives investors toward gold as a reliable store of value and a hedge against inflation, currency depreciation, and economic uncertainty. This increased demand for gold during economic downturns results in higher gold prices.The recent 1 trillion-yuan economic stimulus package from China to boost its sluggish economy also assists global gold prices. Stimulus measures can influence inflation expectations, industrial demand, currency values, and global economic sentiment which plays a significant role in shaping the demand and price dynamics of gold. Besides, the central banks are the key demand driver of gold in recent times. As per World Gold Council data, central banks have accelerated gold purchases to above 1000 tonnes per year in 2022 and 2023. In the face of seemingly challenging conditions like higher yields and US dollar strength, there are forecasts that the central bank’s appetite for gold would continue this year as well. The broad bullish outlook remains intact due to healthy fundamentals, but intermittent corrections can be seen. Weakness in the US dollar, US rate cut speculation, escalating geopolitical tensions, worries over the global economic outlook, and high central bank purchases would be the positive triggers for the commodity. Meanwhile, firm global equities and any changes in the Fed’s policy decisions would cause a downturn in prices later. (The author is Head of Commodities, Geojit Financial Services)

Canada has introduced a new legislation that will make citizenship easier. The new legislation will automatically confer Canadian citizenship to individuals born abroad to a Canadian parent who was also born abroad before the enactment of this legislation. It also extends the ability to apply for a direct grant of citizenship to children born outside Canada and adopted by a Canadian parent beyond the first generation. For parents born abroad and wishing to pass on citizenship to their children born or adopted outside Canada after the legislation comes into force, they will need to have spent at least 1,095 cumulative days physically present in Canada before the birth or adoption."The current rules generally restrict citizenship by descent to the first generation, excluding some people who have a genuine connection to Canada. This has unacceptable consequences for families and impacts life choices, such as where individuals may choose to live, work, study, or even where to have children and raise a family. These changes aim to be inclusive and protect the value of Canadian citizenship, as we are committed to making the citizenship process as fair and transparent as possible," Marc Miller, Minister of Immigration, Refugees and Citizenship, said.This new bill, known as Bill C-71, An Act to amend the Citizenship Act (2024), seeks to address limitations imposed by the 2009 legislative changes which restricted the transmission of citizenship to children born outside Canada only if their Canadian parent was either born in Canada or naturalized before their birth.Bill C-71 also aims to restore citizenship to "Lost Canadians"—individuals who lost or never acquired citizenship due to outdated provisions in previous citizenship laws. It will also grant citizenship to their descendants and anyone born abroad to a Canadian parent in the second or subsequent generations prior to the legislation's enforcement.Minister Miller emphasized the importance of these changes, stating they are crucial for integration and fostering a sense of belonging in Canada, a country built on the principles of democracy, equality, and multiculturalism."Canadian citizenship is a cornerstone of integration for many immigrants. It embodies our democratic values, equality, and multicultural ethos," Miller said.The introduction of Bill C-71 reflects Canada's commitment to ensuring its citizenship laws are inclusive and representative of its diverse population. As the legislation progresses through Parliament, individuals potentially affected by these changes are encouraged to stay informed through the Immigration, Refugees and Citizenship Canada (IRCC) website for updates and further details on eligibility.This proposed legislative change underscores the Canadian government's dedication to maintaining the value of Canadian citizenship while adapting to the evolving needs of its citizens worldwide. If passed, these amendments will mark a significant step towards a more inclusive and equitable approach to Canadian citizenship by descent.107937198

While investing, everyone who adheres to a clearly defined rule-based strategy stands a chance to make money. If the rules have stood the test of time, the odds of winning are even higher. Factor-based or smart beta exchange traded funds (ETF) adopt this rule-based approach of portfolio construction. They can be an interesting portfolio candidate for smart investors.Historically, portfolios constructed on the factors or parameters such as quality, value, growth, alpha, momentum, volatility, tend to reward investors with returns in excess of that generated by market-cap based indices. These factors can be expressed numerically and a factor index can be crafted. For example, the quality score of a company is computed using debt to equity ratio, return on equity and EPS growth variability in five years. Companies are then sorted on the quality score parameter in a rule-based manner and then a basket of them is created to offer an index comprising high-quality stocks.Mutual fund houses tend to launch ETFs that track the performance of the factor indices. Factor indices thus are placed in a sweet spot between passively managed ETFs and actively managed equity funds. These schemes charge less than actively managed equity funds towards expenses. Hence, they are cost-effective. While an actively managed diversified equity fund typically charges between 1% and 2.25% towards expenses, the factor ETFs charge around 30 basis points. ETFs tracking popular market-cap based indices such as Nifty 50, charge as low as 5 basis points.The factor ETFs not only score better on the costs, but they also can be rewarding. For example, in one year ended April 30, 2024, Nifty 200 TRI gave 36.09% returns, compared to 83.86% returns given by Nifty Alpha50 TRI and 70.03% returns given by Nifty200 Momentum 30 TRI. Over the same period Nifty Smallcap 250 TRI – the yardstick for popular small cap stocks, gave 69.67% returns.Though the factor indices can do well over long periods, they may offer less returns compared to their market-cap based counterparts in various phases. For example, Nifty Smallcap250 Quality 30 TRI has given 61.21% returns over one year ended April 30, 2024. Also, compared to 26.03% returns given by Nifty 50 TRI, Nifty Growth Sector 15 TRI has given 22.78% returns.Each factor goes through phases of underperformance. For example, in 2018-2020 value underperformed other factors. In 2018 and 2020 quality topped the performance chart. However, value came back with top of the chart performance in 2021-2023. Quality as a factor of investment, over 2021-2023, offered relatively less returns.In some cases, the fund houses also offer to mimic an index constructed after combining two or more factors. For example, Nifty alpha low volatility 30 index or Nifty MidSmallcap 400 Momentum Quality 100 index. While the former screens stocks on the alpha and low volatility factors, the later picks up mid-small cap stocks based on momentum and quality factors.Investors need to take a long-term view on these ETFs to materially benefit from them and should keep investing in them at regular intervals. Units of such ETFs can be held for a long term as a part of the core portfolio. Investors can also use these ETFs to complement their trading or investment style to achieve diversification. For example, an aggressive trader going after momentum trades, can park some money in the units of low volatility ETF. An investor keen on swing-trades in small cap stocks, may want to keep some money on ETFs tracking Nifty 50 Value 20 index. This index invests in the most attractively valued 20 stocks from the constituents of Nifty 50 index. Such an allocation leads to style diversification and it brings together uncorrelated or less correlated assets, which may improve risk adjusted returns.Investors also get margin against the value of units of ETFs held in their demat account. This margin can be utilised for trading. Over a long period of time, regular investments in units of factor ETFs can help to create a wealth pool which can be utilised for funding various goals such as buying a house, vacations or even retirement. (The author is the founder & CEO of SAS Online – a deep discount stock broking platform. Views are his own)