What is the 2015 Series I Sovereign Gold Bond (SGB)?

The 2015 Series I SGB refers to a specific tranche of Sovereign Gold Bonds issued by the government in November 2015, carrying an interest rate of 2.75% and maturing on 30 November 2023.

What was the return on maturity of the 2015 Series I SGB?

The return on maturity of the 2015 Series I SGB was calculated at 128%, factoring in the interest payments and the increase in the gold price over the holding period.

How does the return of the 2015 Series I SGB compare to the movement in gold prices?

The return on the 2015 Series I SGB was higher than the movement in gold prices (10.88%) over the eight-year period, mainly due to the interest it pays out every six months.

How was the return on the 2015 Series I SGB compared to other investments like fixed deposits (FDs)?

In comparison to fixed deposits, the 2015 Series I SGB showed a higher return. While typical FDs offered lower returns (around 7% pre-tax), the SGB yielded returns ranging from 12.28% to 12.90%.

How did the 2015 Series I SGB perform against equity mutual funds?

In the scenario with a 30% tax on returns, around 42 out of 132 equity mutual funds analysed were outperformed by the SGB. In a no-tax scenario, around 18 funds were surpassed by the SGB.

Why is the comparison of returns between the SGB Nov 2015 and other asset classes cautioned against being done on a point-to-point basis?

We suggest that direct comparison should consider rolling returns rather than point-to-point returns. Rolling returns offer a more comprehensive analysis, considering performance across varying market conditions, providing a better insight into the comparative performance of different assets.

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The first SGB issued in Nov 2015 has given 128% return in 8 years. Is that good or bad?

Posted on 26 Nov 2023
Author: Sayan Sircar

Tags: Gold

14 mins read
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The 2015 Series I SGB showcased a notable return on maturity compared to other investment avenues like fixed deposits and certain equity mutual funds.

The first SGB issued in Nov 2015 has given 128% return in 8 years. Is that good or bad?

This article is a part of our detailed article series on the new issues of Sovereign Gold Bond (SGB) as well as maturity of existing SGBs. Ensure you have read the other parts here:

SGB issued in Mar 2016 has given 126% return in 8 years. How does that compare with FDs and equity mutual funds?

The Mar 2016 SGB showcased a fantastic return on maturity compared to other investment avenues like fixed deposits and some equity mutual funds.

SGB issued in Feb 2016 has given 141% return in 8 years. How does that compare with FDs and equity mutual funds?

The Feb 2016 SGB showcased a fantastic return on maturity compared to other investment avenues like fixed deposits and some equity mutual funds.

Sovereign Gold Bond (SGB) 2023-24 (Series IV) is priced at 6263: Who Should Invest?

Sovereign Gold Bond (SGB) 2023-24 (Series IV): know all the details about it to decide if you should invest.

Sovereign Gold Bond (SGB) 2023-24 (Series III) priced at 6199: Who Should Invest?

Sovereign Gold Bond (SGB) 2023-24 (Series III): know all the details about it to decide if you should invest.

Sovereign Gold Bond (SGB) 2023-24 (Series II) priced at 5923: Who Should Invest?

Sovereign Gold Bond (SGB) 2023-24 (Series II): know all the details about it to decide if you should invest.

Sovereign Gold Bond (SGB) 2023-24 (Series I) priced at 5926: Who Should Invest?

Sovereign Gold Bond (SGB) 2023-24 (Series I): know all the details about it to decide if you should invest.

📚 Topics covered:

Which SGB series we are discussing here?
How much return did this SGB give?
Comparing this SGB return with other investments
Comparing with fixed deposit
Comparing with mutual funds

Which SGB series we are discussing here?

SGB Nov 2015 Maturity Press Release

This is the first SGB that was ever issued way back in November 2015.

Series	2015 Series I SGBNOV23
Issue date	26-Nov-15
ISIN	IN0020150085
Issue Price	₹ 2,684
Interest	2.75%
Maturity date	30-Nov-23
Maturity price	₹ 6,132 (tax-free) (source)
Headline return	128%
Gold price return	10.88%
Rupee fall vs USD	25.23%
Total interest received	₹ 590.48 (taxed at slab)
XIRR (no tax on interest)	12.90%
XIRR (30% tax on interest)	12.28%

The SGB has given a return higher than the gold price due to the interest paid every six months.

How much return did this SGB give?

If you had bought and held this SGB until maturity, then this is the return you would have got based on the amounts you paid, the intermediate interest you got and the final maturity value:

Date	Description	No tax	10% tax	20% tax	30% tax
Nov-15	Investment	-2,684	-2,684	-2,684	-2,684
May-16	6-m interest 1	36.91	33.21	29.52	25.83
Nov-16	6-m interest 2	36.91	33.21	29.52	25.83
May-17	6-m interest 3	36.91	33.21	29.52	25.83
Nov-17	6-m interest 4	36.91	33.21	29.52	25.83
May-18	6-m interest 5	36.91	33.21	29.52	25.83
Nov-18	6-m interest 6	36.91	33.21	29.52	25.83
May-19	6-m interest 7	36.91	33.21	29.52	25.83
Nov-19	6-m interest 8	36.91	33.21	29.52	25.83
May-20	6-m interest 9	36.91	33.21	29.52	25.83
Nov-20	6-m interest 10	36.91	33.21	29.52	25.83
May-21	6-m interest 11	36.91	33.21	29.52	25.83
Nov-21	6-m interest 12	36.91	33.21	29.52	25.83
Jun-22	6-m interest 13	36.91	33.21	29.52	25.83
Dec-22	6-m interest 14	36.91	33.21	29.52	25.83
Jun-23	6-m interest 15	36.91	33.21	29.52	25.83
Nov-23	Maturity	6,168.91	6,165.21	6,161.52	6,157.83
30-Nov-2023	XIRR	12.90%	12.70%	12.49%	12.28%

It is important to note that to get the return in the table above, which is a calculation similar to that of Yield To Maturity or YTM of a bond, the intermediate 6-monthly interest payments must be also invested in SGB, if needed from the secondary market: How to buy SGB from the stock market?.

Simply adding the gold price return with the interest rate will not give the return of the SGB since the interest also has to compound at the same rate.

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Comparing this SGB return with other investments

We all know that SGB gives the highest returns out of all types of gold investment: The Ultimate Guide to Which Type of Gold Gives the Best Returns.

We can see that the SGB has given a return higher than the gold price movement (10.88%) over 8 years due to the interest it pays out.

Please note that the rupee depreciation against the US Dollar, since most of our gold is imported, reduces the headline 128% return by 25% or the yearly return to a more pedestrian 9.27%.

We will now compare this SGB return to other asset classes starting with FD.

Comparing with fixed deposit

SBI was giving 5-10 year FDs offering a modest 7% for non-senior citizens which would have course give a return much lower due to tax. Other banks would have given higher returns but their risk would have been higher as well though all banks are covered under DICGC insurance.

Investment	No tax	10% tax	20% tax	30% tax
SGB	12.90%	12.70%	12.49%	12.28%
SBI FD	7.00%	6.30%	5.60%	4.90%

Comparing with mutual funds

If we look at the universe of all equity mutual funds, and exclude thematic and sectoral funds from it, there were 132 funds at the time of issuance of this SGB which are still active today.

If we consider the 30% post-tax return case, the following 41 funds, i.e. almost 1 out 3 funds, have been beaten by the SGB.

Fund	Return pre-tax	Return after-tax
Nippon India Growth Fund	9.09%	8.39%
Taurus Largecap Equity Fund	9.24%	8.53%
Taurus Flexi Cap Fund	9.57%	8.85%
Lic Mf Flexi Cap Fund	10.36%	9.59%
Nippon India Tax Saver Fund	10.80%	10.00%
Aditya Birla Sun Life Elss Tax Relief ‘96	11.05%	10.24%
Bandhan Flexi Cap Fund	11.19%	10.38%
Dsp Top 100 Equity Fund	11.52%	10.69%
Franklin India Bluechip Fund	11.53%	10.70%
Lic Mf Large Cap Fund	11.77%	10.92%
Franklin India Equity Advantage Fund	11.81%	10.96%
Jm Large Cap Fund (Direct)	11.95%	11.10%
Quantum Tax Saving Fund	12.21%	11.34%
Motilal Oswal Flexi Cap Fund Direct Plan	12.38%	11.51%
Nippon India Vision Fund	12.42%	11.54%
Dsp Focus Fund	12.47%	11.59%
Groww Largecap Fund	12.48%	11.60%
Edelweiss Long Term Equity Fund (Tax Savings)	12.77%	11.88%
Axis Long Term Equity Fund	12.96%	12.06%
Tata Large Cap Fund	12.96%	12.06%
Uti Large Cap Fund	13.06%	12.15%
Aditya Birla Sun Life Equity Advantage Fund	13.06%	12.15%
Motilal Oswal Focused 25 Fund (Mof25)	13.08%	12.17%
Aditya Birla Sun Life Frontline Equity Fund	13.16%	12.24%
Aditya Birla Sun Life Focused Equity Fund	13.21%	12.30%
Lic Mf Elss Tax Saver	13.42%	12.49%
Axis Bluechip Fund	13.42%	12.50%
Axis Focused 25 Fund	13.43%	12.51%
Uti Flexi Cap	13.44%	12.51%
Hsbc Tax Saver Equity Fund	13.47%	12.54%
Icici Prudential Elss Tax Saver Fund	13.48%	12.55%
Bandhan Focused Equity Fund	13.49%	12.56%
Hdfc Elss Tax Saver	13.49%	12.56%
Sbi Blue Chip Fund	13.51%	12.58%
Hsbc Flexi Cap Fund	13.53%	12.60%
Bandhan Large Cap Fund	13.57%	12.64%
Bank Of India Large & Mid Cap Equity Fund	13.57%	12.64%
Uti Elss Tax Saver Fund	13.57%	12.64%
Hsbc Large Cap Fund	13.62%	12.69%
Union Tax Saver (Elss) Fund	13.70%	12.76%
Franklin India Taxshield	13.71%	12.77%

If we assume zero tax in both cases, then the following 18 funds have been beaten by the SGB.

Fund	Return
Nippon India Growth Fund	9.09%
Taurus Largecap Equity Fund	9.24%
Taurus Flexi Cap Fund	9.57%
Lic Mf Flexi Cap Fund	10.36%
Nippon India Tax Saver Fund	10.80%
Aditya Birla Sun Life Elss Tax Relief ‘96	11.05%
Bandhan Flexi Cap Fund	11.19%
Dsp Top 100 Equity Fund	11.52%
Franklin India Bluechip Fund	11.53%
Lic Mf Large Cap Fund	11.77%
Franklin India Equity Advantage Fund	11.81%
Jm Large Cap Fund (Direct)	11.95%
Quantum Tax Saving Fund	12.21%
Motilal Oswal Flexi Cap Fund Direct Plan	12.38%
Nippon India Vision Fund	12.42%
Dsp Focus Fund	12.47%
Groww Largecap Fund	12.48%
Edelweiss Long Term Equity Fund (Tax Savings)	12.77%

Note: All of these are direct plans and regular plan returns would have been obviously worse: Do not make this mistake when investing in mutual funds.

Readers should understand that this comparison of two different asset classes should be done not on this point-to-point fashion but using rolling returns only: What are rolling returns in case of mutual funds? Why is this better than point-to-point returns?

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