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All that glitters: A golden era for precious metals funds

swon@globeandmail.com

What are we looking for?

Stars over the past decade.

Last week, we screened for the dogs among investment funds over the past 10 years. Now, let's see the big winners.

The screen

We looked for the 15 funds with the best track records for the 10 years ended Aug. 31. U.S. dollar, segregated and duplicate versions of the funds were excluded.

What did we find?

Lots of glitter from precious metals funds.

RBC Global Precious Metals, a bank mutual fund that invests mainly in gold miners, emerged at the top with an eye-popping 31.5-per-cent average annual return. The fund has been run by Chris Beer of RBC Global Asset Management since 2003. In addition to picking the right stocks, it has been helped by a gold price that soared 620 per cent over 10 years, as well as lower fees (2.04 to 2.09 per cent in recent years) compared with peers.

While the price of gold hit a record high of over $1,900 (U.S.) an ounce in August, it fell sharply to the $1,680-level during last week's market slide. "It is like the global financial crisis [in 2008]," said Mr. Beer. "People are selling anything which is not tied down, including gold and gold stocks."

Despite the pullback, he sees the price of the metal recovering and surpassing the $2,000-level. "We are in a 11-year bull market for gold," he said. "The issues driving gold are going to be in place for some time... Unless governments are able to solve their fiscal deficits, I still see a move away from fiat currencies for a hard asset that is not managed by central bankers."

During the past decade, the fund has owned stocks such as Goldcorp Inc. Last year, the senior gold producer bought Andean Resources Ltd., also in the fund, "so our Goldcorp position has increased from that acquisition," he said. "We had a large position in Red Back Mining, which was acquired by Kinross and now we own Kinross. But our favourite large cap is probably Goldcorp."

While gold stocks have lagged the price of bullion this year, Mr. Beer expects that trend to reverse itself "as people become more comfortable with the gold price being at an elevated level [which will affect analysts' targets], and the companies begin to pay larger dividends."

*****

STARS OF THE DECADE TO AUG. 31, 2011

(Aug. 31)(Aug. 31)(Aug. 31)
AssetsLatest10-yr %YTDCalendar year % rtn
Fund nameCategory($-mil)MERrtn% rtn2010200920082007200620052004200320022001
RBC Global Precious MetalsPrecious Metals Equity1,482.72.0931.5%-9.0%75.1%65.7%-26.2%9.0%52.4%25.3%-17.3%65.2%153.1%34.4%
AGF Precious MetalPrecious Metals Equity741.02.5827.0%-7.4%59.6%62.8%-36.4%6.7%63.9%19.4%-7.9%64.5%103.8%24.4%
Front Street Special Opp Cdn CC-BNatural Resources Equity156.29.1626.6%-16.0%43.6%131.4%-46.3%8.0%22.5%46.8%34.5%121.2%14.5%3.4%
Dynamic Precious MetalsPrecious Metals Equity1,147.22.6025.2%-3.3%68.4%60.9%-27.6%5.6%62.7%26.3%-24.4%52.3%81.7%42.0%
Sentry Precious Metals GrwthPrecious Metals Equity828.72.6124.3%-2.9%78.5%85.4%-37.1%9.7%74.0%35.3%-11.3%24.5%44.4%23.6%
Altamira Precious & Strategic MetalPrecious Metals Equity90.02.4622.7%-9.5%73.3%58.3%-29.4%-2.4%42.7%13.1%-12.6%67.1%83.3%19.0%
TDK Resource Fund Inc.Misc. - Undisclosed Holdings42.03.6122.0%-11.3%46.5%106.1%-47.7%-5.0%49.5%51.6%22.4%44.5%37.7%n/a
Front Street Growth-BCdn Sml/Md Cap Equity202.92.3921.8%-10.4%44.6%129.9%-53.5%-1.3%20.7%47.4%24.3%62.4%24.2%9.3%
Dynamic Focus+ ResourceNatural Resources Equity850.14.1921.6%-5.9%35.5%113.0%-50.7%14.3%58.7%34.9%19.4%42.6%25.3%12.1%
Mackenzie Univ Wld Prec Metal ClassPrecious Metals Equity120.02.5720.2%4.4%49.1%68.6%-45.0%7.6%53.8%30.1%-19.4%31.4%64.3%47.3%
CIBC Precious MetalsPrecious Metals Equity146.82.4220.2%-21.9%67.0%63.1%-42.0%6.6%58.2%25.3%-15.6%58.0%67.1%27.4%
Mackenzie Univ Precious MetalsPrecious Metals Equity617.52.5320.0%1.7%46.6%66.8%-46.1%6.6%49.2%26.8%-20.5%30.8%89.7%44.4%
TD Precious MetalsPrecious Metals Equity330.32.2719.5%-7.6%44.8%61.6%-33.4%4.6%49.4%26.8%-15.1%30.7%74.3%27.7%
Altamira ResourceNatural Resources Equity196.12.4518.8%-7.3%38.1%37.4%-31.3%19.0%30.3%32.8%21.9%50.3%24.4%-8.4%
Sprott Canadian EquityNatural Resources Equity1,814.52.8118.4%-7.6%57.6%36.0%-43.7%13.8%39.6%13.2%37.9%30.0%39.3%43.7%
S&P/TSX Total Return8.1%-3.5%17.6%35.1%-33.0%9.8%17.3%24.1%14.5%26.7%-12.4%-12.6%
MSCI World ($ Cdn)-0.5%-5.2%6.8%11.8%-26.1%-7.1%20.6%6.6%7.3%9.4%-20.2%-11.4%
S&P 500 Composite ($ Cdn)-3.8%-3.5%7.2%5.5%-23.8%-12.2%13.6%-0.2%1.5%3.4%-24.0%-7.7%
Source: Globe Investor, Bloomberg

© 2007 The Globe and Mail. All rights reserved.

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