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Buy 5 Precious Metals Mutual Funds with the Glitter of Gold

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Following recent global growth concerns, investing in precious metals might be a great idea. These funds also offer solid protection against inflation that almost no other reasonably liquid asset can provide. Moreover, they have staged a remarkable rebound since the start of 2016, emerging as the best performers among the broader mutual fund categories.

Further, gold has regained its luster this year after a tumultuous 2015, manifested by a roughly 25% surge in its value in the first half. The yellow metal’s bull-run is a function of a combination of factors. Among these are the Federal Reserve’s move to keep interest rates steady in its June meeting and a strong tailwind from Britain’s historic decision to leave the European Union (EU).

Gold Shines as Uncertainty Persists

Gold prices crossed the $1,300 per troy ounce threshold last month (reaching as high as $1,358 an ounce) after Britain voted in favor of exiting the EU, sending the global stock markets into a tailspin. The market-rattling move sparked an almost 8% rise in the yellow metal’s price to levels last seen in Jul 2014.

The outcome of the EU referendum has fueled safe-haven buying as investors fret that ‘Brexit’ would bring political and financial instability to Europe and could have serious consequences on the global economy. The Brexit-induced chaos in the global markets spurred investors’ demand for safe havens, triggering a strong rally in gold prices.

Also, the Fed left benchmark interest rates steady (in the band of 0.25–0.50%) last month following a lackluster job report in May. The central bank also gave no clues on the timing of the next rate hike. A delay in raising interest rates elevates demand for gold.

Brexit: A Boon For Gold

The intense market uncertainty brought forth by Brexit is expected to continue to drive investors’ appetite for safe-haven assets, particularly gold, in the coming days. Some analysts feel that gold’s northern march will continue and prices could even touch the $1,500 an ounce level later this year given the profound impact of Brexit on the global financial markets, macroeconomic uncertainties and concerns over global economic growth.

Global economic uncertainty stirred up by Brexit is also likely to prompt the Fed to hold off on raising interest rates for now. A low interest rate environment may have a positive impact on gold. Following the steady recovery in gold prices, mutual funds that have significant exposure to the precious metal sector could be solid investments. Below is the list of the 10 best performing gold mutual funds.

Category Name

2Q16 (%)

1H16 (%)

1-Year (%)

U.S. Global Investors World Precious Minerals (UNWPX)

58.83

124.73

98.35

VanEck International Investors Gold A (INIVX)

57.38

115.59

71.28

American Century Global Gold A (ACGGX)

49.21

115.90

73.33

Gabelli Gold A (GLDAX)

48.99

112.28

79.34

Oppenheimer Gold & Special Minerals C (OGMCX)

47.95

102.38

67.35

Rydex Precious Metals Investor (RYPMX - Free Report)

47.86

123.74

70.87

USAA Precious Metals and Minerals (USAGX)

47.02

107.38

60.68

Franklin Gold and Precious Metals Advisor (FGADX - Free Report)

46.95

112.07

67.01

Wells Fargo Precious Metals Admin (EKWDX)

46.67

107.90

68.64

Invesco Gold & Precious Metals Y (IGDYX)

46.52

103.10

58.33

Buy These 5 Precious Metals Mutual Funds

We have selected five precious metal mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging year-to-date returns. These also have minimum initial investment within $5000 and low expense ratios.

We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.

American Century Global Gold Investor (BGEIX - Free Report) seeks capital growth and dividends. BGEIX invests in securities other than stocks, like debentures, bonds, gold, gold futures, etc. The fund has YTD return of 112.35%, and an expense ratio of 0.67% as compared to the category average of 1.45%. BGEIX has a Zacks Mutual Fund Rank #1.

Deutsche Gold & Precious Metals S invests a lions’ share of its assets in common stocks and other equities of domestic and foreign companies, from the precious metals sector. The fund has YTD return of 108.94%, and an expense ratio of 1% as compared to the category average of 1.45%. SCGDX has a Zacks Mutual Fund Rank #1.

Fidelity Select Gold (FSAGX - Free Report) seeks appreciation of capital. FSAGX normally invests more than 80% of assets in securities of companies, which are engaged in activities related to gold. The fund has YTD return of 103.24%, and an expense ratio of 0.93% as compared to the category average of 1.45%. FSAGX has a Zacks Mutual Fund Rank #1.

Franklin Gold and Precious Metals Advisor (FGADX - Free Report) invests a major portion of its assets in companies from gold and precious metals sector. FGADX seeks capital appreciation. The fund has YTD return of 119.74%, and an expense ratio of 0.84% as compared to the category average of 1.45%. FGADX has a Zacks Mutual Fund Rank #2.

Rydex Precious Metals Investor (RYPMX - Free Report) seeks to offer growth of capital by investing in U.S. and foreign companies that are involved in the precious metals sector. The fund has YTD return of 123.74%, and an expense ratio of 1.25% as compared to the category average of 1.45%. RYPMX has a Zacks Mutual Fund Rank #2.

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Pick the best mutual funds with the help of Zacks Rank.

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