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, gold and precious metal mutual funds usually carry more volatility than the average equity or stock fund.
Key Takeaways
- Precious metals portfolios primarily consist of mining stocks; companies that are involved in the mining of metals such as gold, silver, and platinum.
- The bulk of metals investment funds hold a large portion of their assets in the stocks of mining companies, though some do purchase actual physical metals.
- Most precious metals companies are found in the U.S., Canada, Australia, and South Africa, where many deposits of precious metals can be found.
- There are many precious metal funds to choose from for an individual to gain exposure to the metals industry.
1. Allspring Precious Metals Fund
Wells Fargo issued the Wells Fargo Precious Metals Fund (EKWAX) for the first time in 1998. The main goal of the fund is long-term capital growth. Wells Fargo Asset Management changed its name to Allspring Global Investments in 2021, becoming an independent asset manager.
Michael P. Bradshaw, the fund's manager, seeks to accomplish the fund's 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 25% of its assets into debt securities related to metals. Any dividends or capital gains are distributed annually.
The net expense ratio for this fund is 1.84%. The five-year total return for the fund is 6.80% as of Feb. 28, 2022. The total portfolio assets for this fund are $379.8 million as of March 18, 2022.
The fund's major portfolio holdings include Barrick Gold, Wheaton Precious Metals, Kinross Gold, Gold Field Limited, and Franco-Nevada Corp.
2. Fidelity Select Gold Portfolio Fund
The Fidelity Select Gold Portfolio Fund (FSAGX) was established in 1985 by Fidelity Investments. This precious metals fund’s main focus is to provide investors with capital appreciation.
Under normal circ*mstances, fund manager Steven Calhoun 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.
Investments are also made in additional precious metals, instruments with a 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 a net expense ratio of 0.76%. The five-year average total return for the fund is 6.73% as of Feb. 28, 2022. Total portfolio assets for the fund are $1.3 billion.
Some of the fund's major holdings include Newmont, Barrick, Franco-Nevada, and Agnico Eagle Mines.
3. Gabelli Gold Fund
The Gabelli Gold Fund (GLDAX) was issued by Gabelli Funds in 1994. 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 has total portfolio assets of $431 million as of March 18, 2022.
The Gabelli Gold Fund has a net expense ratio of 1.48%. The five-year average annualized return for this fund is 9.20% as of March 18, 2022. Top holdings for the fund include Franco-Nevada, Newmont, Barrick, and Agnico Eagle Mines.
4. USAA Precious Metals and Minerals Fund
Issued by USAA Investments in 1984, the USAA Precious Metals and Minerals Fund (USAGX), with total portfolio assets of approximately $679 million as of March 18, 2022, seeks the preservation of purchasing power of capital against inflation and to reduce portfolio volatility. USAA Investments is a franchise of Victory Capital.
The fund's manager, Mannik Dhillon, 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 other precious minerals.
The net expense ratio for the USAA Precious Metals and Minerals Fund is 1.12%. The fund's five-year average annual total return is 8.18% as of Feb. 28, 2022. Some of the fund's major portfolio holdings are Newmont, Barrick, Agnico Eagle Mines, and Kinross.
5. Invesco Gold and Special Minerals Fund
The Invesco Gold and Special Minerals Fund (OPGSX), founded in 1983, seeks long-term capital appreciation.
The fund's manager, Shanquan Li, invests in the stocks of mining companies that are focused on gold and other precious metals. The fund has a net expense ratio of 1.05% and total assets of $2.3 billion as of March 18, 2022. The fund's five-year average annual return is 12.57%.
Primary holdings include Barrick, Northern Star Resources, Newmont, and Evolution Mining. Gold makes up the majority of the portfolio at 75% of assets.
Are Precious Metals Funds a Good Investment?
Determining what a "good" investment is will depend on the specific investor and their investment goals and risk tolerance. In general, precious metals funds can be a good way to diversify a portfolio as well as a good hedge against inflation.
What Precious Metal Is Best to Invest In?
Gold has been the most popular precious metal to invest in. It is considered a strong hedge against inflation, is durable, and is a good conductor of heat and electricity. It is also in high demand for jewelry, its primary use, and is commonly used as a form of currency.
What Are the Main Precious Metals?
The primary precious metals are gold, silver, palladium, platinum, iridium, rhodium, ruthenium, and osmium. Precious metals are considered precious because they are rare, which gives them their high economic value. These metals are also significantly used in jewelry and industrial processes.
