BY J.B. MAVERICK Updated Sep 2, 2015
Typically, a precious metals portfolio focuses on mining stocks. Some funds, however, purchase a small-to-moderate amount of gold or silver bullion. Though primary allocation is given to gold mining stocks, many funds do offer a substantial amount of exposure to other precious metals, such as platinum and silver. Precious metals companies span the globe, with many of the major firms headquartered in the United States, Canada, Australia and South Africa. Like most commodity funds, precious metals funds usually carry more volatility than the average equity fund.
Vanguard Precious Metals and Mining Fund
The Vanguard Precious Metals and Mining fund was established in 1984. The primary objective of this mutual fund is to offer investors long-term capital appreciation. The fund manager, Randeep Somel, aims to accomplish this goal by investing in the stocks of both U.S. domestic and foreign companies that take part in the exploration, mining, processing or marketing of silver, platinum, gold, diamonds, or other rare minerals and precious metals. He puts emphasis on companies that have attractively high levels of ore and proven or probable reserves, and that are operationally cost-efficient. Somel also tries to maintain diversity among the geographic locations of the companies. The fund’s assets may also be invested, up to a maximum of 20%, directly in gold, silver or other precious metal bullion and coins.
Issued by Vanguard, this fund has an expense ratio of 0.29%. It offers investors a dividend yield of just over 2% yearly. The five-year annualized return for the Vanguard Precious Metals and Mining Fund is -14.8%. The total assets for this fund are just under $2 billion. The fund has an above-average risk level. Top holdings for the fund include Dominion Diamond Corporation, BHP Billiton Plc, Nevsun Resources, Ltd. and Goldcorp, Inc.
Wells Fargo Advantage Precious Metals Fund
Wells Fargo issued the Wells Fargo Advantage Precious Metals fund for the first time in 1998. The main goal of the fund is to offer investors both protection of the purchasing power of capital and long-term capital growth. Michael P. Bradshaw, the fund’s manager, seeks to accomplish this objective by typically investing 80% or more of the fund’s assets in companies that actively participate in the exploration, mining and processing of gold, companies that deal in gold and other precious metals and minerals, or companies that generate a minimum of half of their revenues from such business. The fund may invest up to 40% of its assets into emerging market countries’ equities and up to 30% of its assets into convertible debt securities. Any dividends or capital gains are distributed annually.
The expense ratio for this fund is 1.1%, above average as compared to similar funds. The five-year annualized return for the Wells Fargo Advantage Precious Metals Fund is -18.5%. The total portfolio assets for this fund are just over $320 million. The risk level for the fund is rated as just slightly above average. The fund’s major portfolio holdings include Randgold Resources, Ltd., Agnico Eagle Mines, Ltd., Royal Gold Inc., Newmont Mining Corporation and the silver streaming firm Silver Wheaton Corporation.
Fidelity Select Gold Portfolio Fund
The Fidelity Select Gold Portfolio mutual fund was established in 2006 by the Fidelity Investments Group. This precious metal fund’s main focus is to provide investors with capital appreciation. Under normal circumstances, fund manager Joe Wickwire invests a minimum of 80% of the fund’s total assets in the common stocks of corporations that participate in various forms of gold-related operations, and in gold bullion and coins. Wickwire also invests the fund’s assets in additional precious metals, instruments with value that is connected to the price of precious metals, and the securities of businesses that distribute products, such as jewelry, that contain precious metals and minerals. The fund is invested in both U.S. domestic and foreign-issued stocks.
The Fidelity Select Gold Portfolio Fund has an expense ratio of 1.2%, above average for the fund category. The five-year annualized return for the fund is approximately -19.7%. Total portfolio assets for the fund are over $860 million. This mutual fund is rated as having an above-average risk level. Some of the fund’s major holdings include Goldcorp, Inc., Randgold Resources, Ltd., Franco-Nevada Corporation, Barrick Gold Corporation and Newcrest Mining, Ltd. Gold bullion accounts for 7% of the fund’s total assets.
Gabelli Gold Fund
The Gabelli Gold Fund was issued by Gabelli Funds in February 2003. The long-term appreciation of capital is the fund’s primary objective. Fund manager Caesar Bryan achieves this objective by investing 80% or more of the fund’s total assets, along with any borrowed investment capital, into U.S. domestic and foreign-issued equity securities of corporations engaged in operations related to gold, and in gold bullion. The fund manager’s investing strategy includes seeking to identify undervalued companies and companies with above-average growth potential. The fund has total portfolio assets of over $170 million.
The Gabelli Gold Fund has an expense ratio of approximately 1.6%, well above average for similar precious metals funds. The five year annualized return for this mutual fund is -17.1%. This mutual fund’s risk level is above-average. Top holdings for the fund include Randgold Resources, Ltd., Franco-Nevada Corporation, Newmont Mining Corporation, El Dorado Gold Corporation and Agnico Eagle Mines, Ltd.
USAA Precious Metals and Minerals Fund
Issued by the USAA Group in 1984, the USAA Precious Metals and Minerals Fund, with total portfolio assets of approximately $690 million, has two primary investment objectives: long-term capital appreciation and preservation of purchasing power of capital against inflation. The fund also seeks to provide current income by investing in dividend-paying companies in the precious metals industry. The fund’s manager, Dan Denbow, aims to accomplish these objectives by ordinarily investing at least 80% of the fund’s assets in foreign and domestic companies with foremost operations in the exploration, mining or processing of gold, silver, platinum, diamonds or precious minerals. Dividends and capital gains are distributed annually.
The expense ratio for the USAA Precious Metals and Minerals Fund is approximately 1.25%. The fund offers a dividend yield of 1.75%. The fund’s five-year annualized return is approximately -21%. This fund is rated as having a slightly above-average risk level. Some of the fund’s major portfolio holdings are Randgold Resources, Ltd., Silver Wheaton Corporation, Royal Gold, Inc., and the major Peruvian mining company Compania de Minas Buenaventura S.A.SPONSORED
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