Gold prices touched the highest settlement in the last 11 weeks on Aug 21. Prices of the yellow metal also reached this year’s best intraday high, rising above $1300 an ounce on Friday. Gold’s rise was triggered by uncertainty in both domestic and global markets. Tensions between the U.S. and North Korea were rekindled over the weekend, which also heightened investors’ interest in safe havens such as precious metals.
Gold lost some of its luster in 2016 after a tumultuous 2015, but has managed to maintain its bull run this year. With gold prices shining, this looks like a good time to invest in mutual funds which have significant exposure to the precious metals sector.
Losses on Friday Despite Domestic, Foreign Concerns
Gold prices reached an intraday high level of $1,306.90 an ounce on Friday, its best since last November, following concerns over President Trump’s administration and a terrorist attack in Barcelona. The growing backlash against the President following his remarks on the Charlottesville incident has raised doubts over his abilities to implement his pro-growth economic policies. Also, the departure of chief strategist Steve Bannon from the White House exposed a lot of difference in the Trump administration.
Additionally, the terror attack in Barcelona during which 14 people were killed and about 130 were injured weighed on investor sentiment. Tensions in domestic and global markets boosted gold prices during the day, but gold lost $15 to settle at $1,291.60 an ounce on Friday from its intraday high.
Gold Rebounds on Monday to Strike 11-Week High
However, rising geopolitical tensions between the U.S. and North Korea, led gold prices to increase by $5.10 on Monday, settling at $1,296.70 an ounce, reaching an 11-week high level of $1,299.70 an ounce during the day.
Fresh concerns were raised with the start of joint military exercises between the U.S. and South Korea. Officials from North Korea criticized this move, terming it as “reckless behavior” and blamed Washington for heightening “military tension” in the Korean peninsula.
Further, SPDR Gold Shares (GLD) has increased 3.7% and 11.5% in the last six months and year-to-date (YTD), respectively. According to Morningstar, the precious metal mutual fund category has posted YTD and one-month returns of 7.8% and 0.8%, respectively.
5 Precious Metals Mutual Funds to Buy
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 YTD 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.
Vanguard Precious Metals and Mining (VGPMX - Free Report) seeks growth of capital over the long term. The fund invests heavily in stocks of both domestic and foreign companies whose primary operations concern precious metals including gold. This non-diversified fund may also invest around one-fifth of its assets in gold, silver and other precious metals coins and bullion.
VGPMX has YTD returnsof 11.8%, and an expense ratio of 0.43% compared with the category average of 1.32%. The fund has a Zacks Mutual Fund Rank #1.
First Eagle Gold A (SGGDX - Free Report) seeks to derive returns by investing in gold. SGGDX invests a large chunk of its assets in gold or securities of companies that operate within the gold industry, including securities of gold operating and financing companies. The fund may also invest, to a lesser extent, in other precious metals. The First Eagle Gold A fund is non-diversified.
SGGDX has YTD returnsof 10.4%, and an expense ratio of 1.27% compared with the category average of 1.32%. The fund has a Zacks Mutual Fund Rank #1.
Oppenheimer Gold & Special Minerals A (OPGSX - Free Report) invests primarily in common stocks of companies engaged in processing, mining and dealing in gold, gold bullion and precious metals-based ETFs. OPGSX invests not more than one-fourth of its assets in the Oppenheimer Gold & Special Minerals Fund (Cayman) Ltd. The fund seeks growth of capital.
OPGSX has YTD returns of 13.6%, and an expense ratio of 1.17% compared with the category average of 1.32%. The fund has a Zacks Mutual Fund Rank #1.
Fidelity Select Gold (FSAGX - Free Report) seeks appreciation of capital. FSAGX normally invests a large part of assets in securities of companies, which are engaged in various activities like exploration, mining and processing of gold. The fund may also invest nearly one-fourth of its assets in various precious metals including gold through a wholly owned subsidiary.
FSAGX has YTD returns of 8.9%, and an expense ratio of 0.84% compared with the category average of 1.32%. The fund has a Zacks Mutual Fund Rank #2.
Wells Fargo Precious Metals A (EKWAX - Free Report) seeks capital growth for the long run by investing a bulk of its assets in stocks of companies involved in the precious metals business. EKWAX may also invest in equity securities of foreign companies like ADRs. The fund invests not more than 40% of its assets in equity securities of companies based in emerging markets.
EKWAX has YTD returns of 9.3%, and an expense ratio of 1.09% compared with the category average of 1.32%. The fund has a Zacks Mutual Fund Rank #2.
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