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As Gold Glitters, Buy These 4 Precious Metals Mutual Funds
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Gold prices scaled a near three-week high as discouraging economic data dimmed chances of a rate hike. While service sector expanded at the slowest pace in August since 2010, manufacturing activity contracted during the same period. Pace of hiring also slowed down in the month.
With lower chances of a rate hike, yield-bearing assets have lost their appeal and the U.S. dollar has also weakened, which in turn benefits golds. It has been a stunning rally for gold this year, while September has been the best month for the yellow metal historically.
Given that there is upside potential for gold, investing in mutual funds having a significant exposure to this metal seems to be prudent.
Gold Shines,Rate Hike Expectations Diminish
On Sep 6, gold prices jumped $27.30, or 2.1% to close at $1,354 an ounce, the highest since Aug 18. Prices soared after dismal U.S. economic data reassured investors that interest rates will remain low for quite some time now.
According to the Institute for Supply Management, the non-manufacturing index dropped to 51.4 in August from 55.5 in July. As services account for a major portion of the economy, weak growth in the sector dims hopes of a rate hike in the near term. Manufacturing activity also contracted in August for the first time since February. According to the Institute for Supply Management, its manufacturing index dropped to 49.4 in August from 52.6 last month.
Pace of job additions also slowed down in August following huge gains in early summer. The non-farm payroll reading of 151,000 last month was well below the estimated 180,000. Average hourly earnings on private non-farm payrolls grew 0.1% last month and 2.4% from a year earlier to $25.73 in August. However, this was less than July’s annual gain of 2.7%. August’s wage gains won’t fuel inflation, which remains below the Fed’s target range of 2% for a considerable period of time. Reaching the desired inflation level is imperative for a rate hike. Reaching the desired inflation level is imperative for a rate hike.
Low Borrowing Costs: A Boon for Gold
As chances of a rate hike ebb, yield bearing investments like bonds and other fixed income investments turn out to be less attractive, while gold which bears no yield becomes tempting.
Further, the U.S. dollar dipped against major currencies on receding expectations of an imminent interest rate rise. There is an intrinsic co-relation between gold prices and the U.S. dollar. Banks generally tend to invest more in gold when U.S. dollar falls in order to protect their money and hedge against uncertainties. This in turn increases the value and subsequently boosts the demand for gold (read more: The Effect of Fed Fund Rate Hikes on Gold).
4 Mutual Funds to Buy as Gold Sparkles
Investors should cash in on this bullish trend by investing in gold funds. Gold has surged almost 30% this year. Brexit-induced volatility across the broader markets also drove demand for safe-haven assets like the yellow metal (read more: Brexit It Is; Gold Shoots to 2-Year Highs).
Additionally, we are now in September, historically the best month of the year for the yellow metal. Since the early 1970’s, the average return gold has produced in September is 2.2%, while the average return for the rest of the 11 months combined is 0.6%. Needless to say, demand for gold will improve further, courtesy of more demand from India and China owing to the festivities.
We have selected four mutual funds that have given whopping year-to-date and 1-year returns, boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), offer a minimum initial investment within $5,000 and carry a low expense ratio.
The question here is why should investors consider mutual funds? Reduced transaction costs and diversification of portfolios without the several commission charges that are associated with stock purchases are the primary reasons why one should be parking their money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Fidelity Advisor Gold A (FGDAX - Free Report) invests the majority of its assets in securities of companies involved in gold-related activities and in gold bullion or coins. FGDAX’s year-to-date and 1-year returns are 90.3% and 90.6%, respectively. Annual expense ratio of 1.20% is lower than the category average of 1.33%. FGDAX has a Zacks Mutual Fund Rank #1.
Franklin Gold and Precious Metals A (FKRCX - Free Report) invest a major portion of its assets in securities of gold and precious metals operation companies. FKRCX’s year-to-date and 1-year returns are 100.9% and 90%, respectively. Annual expense ratio of 1.09% is below the category average of 1.33%. FKRCX has a Zacks Mutual Fund Rank #2.
Deutsche Gold & Precious Metals A invests a large portion of its assets in common stocks and other equities of U.S. and foreign companies engaged in activities related to gold or other precious metals. SGDAX’s year-to-date and 1-year returns are 92.8% and 91.5%, respectively. Annual expense ratio of 1.25% is lower than the category average of 1.33%. SGDAX has a Zacks Mutual Fund Rank #1.
American Century Global Gold A (ACGGX - Free Report) invests a large portion of its assets in companies that are engaged in mining, processing, distributing and exploring gold. ACGGX’s year-to-date and 1-year returns are 99.7% and 101.1%, respectively. Annual expense ratio of 0.93% is lower than the category average of 1.33%. ACGGX has a Zacks Mutual Fund Rank #1.
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As Gold Glitters, Buy These 4 Precious Metals Mutual Funds
Gold prices scaled a near three-week high as discouraging economic data dimmed chances of a rate hike. While service sector expanded at the slowest pace in August since 2010, manufacturing activity contracted during the same period. Pace of hiring also slowed down in the month.
With lower chances of a rate hike, yield-bearing assets have lost their appeal and the U.S. dollar has also weakened, which in turn benefits golds. It has been a stunning rally for gold this year, while September has been the best month for the yellow metal historically.
Given that there is upside potential for gold, investing in mutual funds having a significant exposure to this metal seems to be prudent.
Gold Shines, Rate Hike Expectations Diminish
On Sep 6, gold prices jumped $27.30, or 2.1% to close at $1,354 an ounce, the highest since Aug 18. Prices soared after dismal U.S. economic data reassured investors that interest rates will remain low for quite some time now.
According to the Institute for Supply Management, the non-manufacturing index dropped to 51.4 in August from 55.5 in July. As services account for a major portion of the economy, weak growth in the sector dims hopes of a rate hike in the near term. Manufacturing activity also contracted in August for the first time since February. According to the Institute for Supply Management, its manufacturing index dropped to 49.4 in August from 52.6 last month.
Pace of job additions also slowed down in August following huge gains in early summer. The non-farm payroll reading of 151,000 last month was well below the estimated 180,000. Average hourly earnings on private non-farm payrolls grew 0.1% last month and 2.4% from a year earlier to $25.73 in August. However, this was less than July’s annual gain of 2.7%. August’s wage gains won’t fuel inflation, which remains below the Fed’s target range of 2% for a considerable period of time. Reaching the desired inflation level is imperative for a rate hike. Reaching the desired inflation level is imperative for a rate hike.
Low Borrowing Costs: A Boon for Gold
As chances of a rate hike ebb, yield bearing investments like bonds and other fixed income investments turn out to be less attractive, while gold which bears no yield becomes tempting.
Further, the U.S. dollar dipped against major currencies on receding expectations of an imminent interest rate rise. There is an intrinsic co-relation between gold prices and the U.S. dollar. Banks generally tend to invest more in gold when U.S. dollar falls in order to protect their money and hedge against uncertainties. This in turn increases the value and subsequently boosts the demand for gold (read more: The Effect of Fed Fund Rate Hikes on Gold).
4 Mutual Funds to Buy as Gold Sparkles
Investors should cash in on this bullish trend by investing in gold funds. Gold has surged almost 30% this year. Brexit-induced volatility across the broader markets also drove demand for safe-haven assets like the yellow metal (read more: Brexit It Is; Gold Shoots to 2-Year Highs).
Additionally, we are now in September, historically the best month of the year for the yellow metal. Since the early 1970’s, the average return gold has produced in September is 2.2%, while the average return for the rest of the 11 months combined is 0.6%. Needless to say, demand for gold will improve further, courtesy of more demand from India and China owing to the festivities.
We have selected four mutual funds that have given whopping year-to-date and 1-year returns, boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), offer a minimum initial investment within $5,000 and carry a low expense ratio.
The question here is why should investors consider mutual funds? Reduced transaction costs and diversification of portfolios without the several commission charges that are associated with stock purchases are the primary reasons why one should be parking their money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Fidelity Advisor Gold A (FGDAX - Free Report) invests the majority of its assets in securities of companies involved in gold-related activities and in gold bullion or coins. FGDAX’s year-to-date and 1-year returns are 90.3% and 90.6%, respectively. Annual expense ratio of 1.20% is lower than the category average of 1.33%. FGDAX has a Zacks Mutual Fund Rank #1.
Franklin Gold and Precious Metals A (FKRCX - Free Report) invest a major portion of its assets in securities of gold and precious metals operation companies. FKRCX’s year-to-date and 1-year returns are 100.9% and 90%, respectively. Annual expense ratio of 1.09% is below the category average of 1.33%. FKRCX has a Zacks Mutual Fund Rank #2.
Deutsche Gold & Precious Metals A invests a large portion of its assets in common stocks and other equities of U.S. and foreign companies engaged in activities related to gold or other precious metals. SGDAX’s year-to-date and 1-year returns are 92.8% and 91.5%, respectively. Annual expense ratio of 1.25% is lower than the category average of 1.33%. SGDAX has a Zacks Mutual Fund Rank #1.
American Century Global Gold A (ACGGX - Free Report) invests a large portion of its assets in companies that are engaged in mining, processing, distributing and exploring gold. ACGGX’s year-to-date and 1-year returns are 99.7% and 101.1%, respectively. Annual expense ratio of 0.93% is lower than the category average of 1.33%. ACGGX has a Zacks Mutual Fund Rank #1.
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 >>