WHAT ARE WE LOOKING FOR?
Precious metals funds have lost their lustre lately after being on fire for two years, but there are still plenty of gold bulls around.
Myles Zyblock, chief institutional strategist at RBC Dominion
Securities Inc., said in an investment strategy report this week that gold is in its "sixth year of a secular bull market, and if history acts as a useful guide, we could quite easily see another three to five years of solid performance from the metal."
If you have a bullish view on the yellow metal, or simply want to diversify your investments, this year could be a good entry point for the next leg up. We'll look for the best longer-term
performers in the sector.
We'll examine funds with the best five-year, compounded
annual returns. (We exclude
segregated, pooled and U.S.
dollar funds). The spot price for gold fell to $649.65 (U.S.) at the end of the second quarter from $663.79 at the end of the first quarter. It closed yesterday at $655.80.
Because the funds fluctuate along with the unpredictable gold price, we will also look at their calendar-year performance since 2002 to see how volatile the
returns can be.
SO WHAT DO WE TURN UP?
With a compounded annual
return of nearly 30 per cent over five years, AGF Precious Metals Fund run by manager Charles
Oliver sits at the top of the charts. The fund has also nicely outperformed its peers in down
markets. Until the end of June, it was up 5.87 per cent while some of its peers are in the red. AGF fund also lost the least money in 2004.
No-load bank funds have also been impressive. Interestingly, CIBC Precious Metals is run by an external fund manager and hot resource specialist Normand
Lamarche of Front Street Capital Inc., and formerly of Altamira Management Ltd. RBC Global
Precious Metals has been managed by Royal Bank's internal
manager Chris Beer since 2003.
Despite the lure of low-fee,
exchanged-traded funds, it hasn't paid off for investors. The iShares Canadian Gold Sector Index fund (TSX:XGD) run by Barclays Global Investors Canada has emerged as the second-worst performer. The fund, which historically tracked the S&P/TSX's subindex of Canadian gold stocks, switched gears last December to replicate the newly created S&P/TSX Global Gold Index. The fund now
includes eight global gold stocks in addition to 22 Canadian companies.
|Returns as of Jun '07|
|Net assets||% 5-yr||%||%||%||%||%||%|
|(as of May 2007)||cmpnd||YTD||2006||2005||2004||2003||2002|
|AGF Precious Metal||580,201||2.61||29.62||5.87||63.91||19.39||-7.95||64.45||103.84|
|CIBC Precious Metals||137,434||2.42||26.05||5.20||58.16||25.26||-15.63||57.96||67.06|
|RBC Global Precious Metals||682,260||2.07||25.92||-1.96||52.40||25.28||-17.30||65.15||153.11|
|Sentry Select Precious Metals Grwth||241,030||2.51||23.50||1.96||74.04||35.27||-11.34||24.45||44.42|
|Sprott Gold and Precious Minerals||663,007||2.84||22.74||-4.39||56.19||16.29||-18.76||72.43||116.24|
|Dynamic Precious Metals||425,796||2.88||21.07||-1.48||62.67||26.26||-24.43||52.33||81.69|
|Altamira Precious & Strategic Metal||66,980||2.67||20.80||-4.32||42.73||13.08||-12.62||67.09||83.33|
|Mackenzie Univ Wld Prec Metal Class||75,754||2.64||20.54||3.89||53.82||30.13||-19.38||31.38||64.28|
|Mackenzie Univ Precious Metals||414,356||2.48||18.77||2.76||49.18||26.84||-20.50||30.78||89.65|
|TD Precious Metals||199,517||2.17||17.24||-4.68||49.39||26.80||-15.07||30.72||74.29|
|BMO Precious Metals||82,235||2.37||12.86||1.51||46.83||24.83||-19.20||2.44||85.06|
|iShares CDN Gold Sector Index||923,028||0.55||9.33||-17.43||40.75||21.72||-8.93||13.81||42.78|
|FCMI Precious Metals Fund Inc.||1,416||7.62||0.88||-20.11||19.85||33.16||-19.01||-3.09||19.36|
Active investors, who are adverse to dead money, might want to use a trading strategy for precious metals funds. Go to globefund.com, hit "top movers" and select "precious metals" in the asset class category. You will find short-term returns of less than a year in addition to longer-term returns. That can give some idea of the upward or downward momentum in the sector.
© 2007 The Globe and Mail. All rights reserved.
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