3 Gold Funds to Buy as Alternate Investment Destinations

Major Wall Street bourses continue to gyrate on account of various domestic and global macro-economic factors. The Eearnings season hasve given some a breather to the investors, and the market reported positively in the month of October after a highly disappointing September. But the overall sentiment remains bearish. The S&P 500, the Dow and the Nasdaq have given negative returns of 20.12%, 11.85%, and 31.02%, respectively, so far this year.                                                                              

The consumer price index (CPI) for the month of September came in at 8.2% on a year-over-year basis, mainly due to the rising prices of shelter, food and medical care. Though the inflation rate has marginally cooled off from the August’s high of 8.3%, it is still hovering around multi- decades highs.

The OPEC+ decision to cut down oil supply by 2 million barrels/day vis-à-vis the rise in oil prices, in the meantime, might elevate inflation in the upcoming winter season. The Federal Reserve’s, in fact, is expected to continue with its monetary policy tightening to counter inflation. Such a stance has made investors worried about an imminent recession, and triggered market volatility.

According to the World Gold Council, the price of the yellow metal dropped (-2.6%) in September in comparison to global equity (-9.5%), the global bond market (-5.1%) and commodities by (-8.4%). Thus, it’s prudent for investors to invest in precious metal mutual funds with significant exposure in the gold industry as it is relatively an outperformer among the other asset classes and, thus, a good diversifier.

Mutual funds, in general, reduce transaction costs and diversify their portfolios without an array of commission charges that are mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

We have thus selected three such mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy), have positive three-year and five-year annualized returns, minimum initial investments within $5000.

First Eagle Gold Fund SGGDX invests most of its assets, along with borrowings, if any, in gold and securities directly related to gold. SGGDX also invests in securities of companies that principally engaged in gold mining finance companies as well as companies operating with long, medium or short short-life mines.

Matthew B. McLennan has been the lead manager of SGGDX since Mar 1, 2013. Most of its net assets are invested in Newmont Corp. (9.95%), Wheaton Precious Metals Corp. (7.63%) and Barrick Gold Corp. (6.69%) as of Apr 30, 2022.

SGGDX three-year and five-year annualized returns are nearly 17.8% and 7.7%, respectively. SGGDX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 1.20%, which is slightly higher than the category average of 1.17%.

To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

Invesco Gold & Special Minerals Fund OGMYX seeks capital appreciation by investing most of its assets along with borrowings, if any, in common stocks of companies that are involved in mining, processing or dealing in gold or other metals or minerals, gold bullion, other physical metals, and precious metals-related ETFs.

Shanquan Li has been the lead manager of OGMYX since Jul 1, 1997. Most of its net assets are invested in Newmont Corp. (5.41%), Barrick Gold Corp. (5.12%) and Northern Star Resources (4.72%) as of Apr 30, 2022.

OGMYX’s three-year and five-year annualized returns are 1.40% and 3.36%, respectively. OGMYX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.81% compared to the category average of 1.17%.

Franklin Gold and Precious Metals Fund FGADX seeks capital appreciation along with current income in the form of dividends or interests by investing most of its in securities of gold and precious metals operation companies, FGADX invests mostly in non-U.S. companies irrespective of its market capitalization.

Steve M. Land has been the lead manager of FGADX since Apr 1, 1999. Most of its net assets are invested in Endeavour Mining PLC. (5.13%), Barrick Gold Corp. (5.06%) and Newcrest Mining (4.11%) as of Apr 30, 2022.

FGADX’s three-year and five-year annualized returns are 1.0% and 2.4%, respectively. FGADX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.65%, less than the category average of 1.17%.

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