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3 Gold Funds to Protect Your Portfolio Amid Market Meltdown
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Wall Street’s major bourses have seen high volatility in recent times as the Federal Reserve’s hawkish monetary policy stance to tame elevated inflation dragged the growth-oriented stocks lower.
Due to high inflation rates, the Fed has adopted a stance to steadily increase interest rates in the near future to bring inflation back to the 2% target, according to Christopher J. Waller, member of the Board of Governors of the Federal Reserve System. The central bank has raised the interest rate by 75 basis points as of March and is expected to hike the overnight rate by half a percentage point at each of its next meetings in June and July. This, coupled with other external factors like the ongoing Russia-Ukraine war as well as China's zero COVID-19 policy, has further affected the global supply chain and in turn the stock market.
Amid such market volatility, investors are looking forward to park their money in alternative asset classes like gold to earn a decent return as well as to preserve their capital. Notably, gold is perceived to be a safe asset amid market volatility.
Incidentally, the demand for gold has picked up. According to the World Gold Council data, Q1 2022 gold demand is 34% above Q1 2021 mostly due to a jump in holding, which is 269 tons more than reversing the 174 tons annual net outflow from 2021. The central banks across the globe also added 84 tons to the global official gold reserves during the first quarter. The price of gold was USD 1811.40/Oz on Jan 4, 2022, and USD 1854.95/Oz on May 30, 2022, while it was the highest on Mar 8, 2022, at USD 2039.5/Oz.
Meanwhile, gold mining production has increased 3% year on year (y-o-y) globally to a little more than 856 tons, the strongest ever first-quarter production since 2000. In North and Central America, production for the yellow metal increased 4% y-o-y, mostly due to mining of higher grades and an increased proportion of underground ores.
Thus, it’s prudent for investors to invest in precious metal mutual funds having gold mining companies as its major holdings.
We have thus selected three such mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy), 2 (Buy), have positive three-year and five-year annualized returns, minimum initial investments within $5000 and carry a low expense ratio.
Invesco Gold & Special Minerals Fund Class Y (OGMYX - Free Report) seeks capital appreciation by investing most of its assets along with borrowing, 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. It had 6.09% of its assets invested in Newmont Corporation, 4.60% in Northern Star Resources and 4.40% on Barrick Gold Corporation as of Apr 30, 2022.
OGMYX’s three-year and five-year annualized returns are 24.6% and 13.3%, respectively. OGMYX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.83% compared to 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.
Franklin Gold and Precious Metals Fund Advisor Class (FGADX - Free Report) 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. It had 5.06% of its net assets invested in Endeavour Mining Corporation, 4.62% in Barrick Gold Corporation, and 3.95% in New Mont Corporation as of Jan 31, 2022
FGADX’s three-year and five-year annualized returns are 27.7% and 10.3%, respectively. FGADX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.65%, less than the category average of 1.17%.
Fidelity Select Gold Portfolio (FSAGX - Free Report) invests most of its net assets in common stocks of companies principally engaged in the exploration, mining and processing of gold and other precious metals. FSAGX also deals in gold bullion or coins.
Steven Calhoun has been the lead manager of FSAGX since Sep 29, 2018. It had 15.14% of its net assets invested in Newmont Corp., 10.98% in Barrick Gold Corporation, and 9.26% in Franco Nevada Corp. as of Feb 28, 2022.
FSAGX three-year and five-year annualized returns are nearly 17.8% and 7.7%, respectively. FSAGX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.76%, less than the category average of 1.17%.
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3 Gold Funds to Protect Your Portfolio Amid Market Meltdown
Wall Street’s major bourses have seen high volatility in recent times as the Federal Reserve’s hawkish monetary policy stance to tame elevated inflation dragged the growth-oriented stocks lower.
Due to high inflation rates, the Fed has adopted a stance to steadily increase interest rates in the near future to bring inflation back to the 2% target, according to Christopher J. Waller, member of the Board of Governors of the Federal Reserve System. The central bank has raised the interest rate by 75 basis points as of March and is expected to hike the overnight rate by half a percentage point at each of its next meetings in June and July. This, coupled with other external factors like the ongoing Russia-Ukraine war as well as China's zero COVID-19 policy, has further affected the global supply chain and in turn the stock market.
Amid such market volatility, investors are looking forward to park their money in alternative asset classes like gold to earn a decent return as well as to preserve their capital. Notably, gold is perceived to be a safe asset amid market volatility.
Incidentally, the demand for gold has picked up. According to the World Gold Council data, Q1 2022 gold demand is 34% above Q1 2021 mostly due to a jump in holding, which is 269 tons more than reversing the 174 tons annual net outflow from 2021. The central banks across the globe also added 84 tons to the global official gold reserves during the first quarter. The price of gold was USD 1811.40/Oz on Jan 4, 2022, and USD 1854.95/Oz on May 30, 2022, while it was the highest on Mar 8, 2022, at USD 2039.5/Oz.
Meanwhile, gold mining production has increased 3% year on year (y-o-y) globally to a little more than 856 tons, the strongest ever first-quarter production since 2000. In North and Central America, production for the yellow metal increased 4% y-o-y, mostly due to mining of higher grades and an increased proportion of underground ores.
Thus, it’s prudent for investors to invest in precious metal mutual funds having gold mining companies as its major holdings.
Mutual funds, in general, reduce transaction costs and diversify 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), 2 (Buy), have positive three-year and five-year annualized returns, minimum initial investments within $5000 and carry a low expense ratio.
Invesco Gold & Special Minerals Fund Class Y (OGMYX - Free Report) seeks capital appreciation by investing most of its assets along with borrowing, 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. It had 6.09% of its assets invested in Newmont Corporation, 4.60% in Northern Star Resources and 4.40% on Barrick Gold Corporation as of Apr 30, 2022.
OGMYX’s three-year and five-year annualized returns are 24.6% and 13.3%, respectively. OGMYX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.83% compared to 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.
Franklin Gold and Precious Metals Fund Advisor Class (FGADX - Free Report) 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. It had 5.06% of its net assets invested in Endeavour Mining Corporation, 4.62% in Barrick Gold Corporation, and 3.95% in New Mont Corporation as of Jan 31, 2022
FGADX’s three-year and five-year annualized returns are 27.7% and 10.3%, respectively. FGADX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.65%, less than the category average of 1.17%.
Fidelity Select Gold Portfolio (FSAGX - Free Report) invests most of its net assets in common stocks of companies principally engaged in the exploration, mining and processing of gold and other precious metals. FSAGX also deals in gold bullion or coins.
Steven Calhoun has been the lead manager of FSAGX since Sep 29, 2018. It had 15.14% of its net assets invested in Newmont Corp., 10.98% in Barrick Gold Corporation, and 9.26% in Franco Nevada Corp. as of Feb 28, 2022.
FSAGX three-year and five-year annualized returns are nearly 17.8% and 7.7%, respectively. FSAGX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.76%, less than the category average of 1.17%.
Want key mutual fund info delivered straight to your inbox?
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>