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Last Updated on November 7, 2023
In the world of investments, diversification is key to mitigating risks and optimizing returns.
Gold and precious metals mutual funds offer an excellent opportunity for investors to diversify their portfolios by investing in a single product that spreads its assets across several precious metals-related securities.
This article provides a detailed report on the best precious metals mutual funds available, helping you make an informed decision when considering these investment options.
We will explore the top five funds, their performance, and the benefits of investing in precious metals.
What is a Precious Metals Mutual Fund?
A precious metals mutual fund is an investment vehicle that pools money from multiple investors to buy a diversified portfolio of stocks, bonds, or other securities associated with precious metals like gold, silver, platinum, and palladium.
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These funds are professionally managed, with the objective of providing a balanced exposure to the precious metals sector and potentially reducing risks compared to direct investment in a single company.
How to Invest in a Precious Metals Mutual Fund
Investing in a precious metals mutual fund can be done through several methods, including:
- Opening an account with a financial institution, such as a bank or brokerage firm, and purchasing shares of the mutual fund.
- Buying shares of the mutual fund directly from the fund company.
- Investing in the mutual fund through a retirement account, such as a 401(k) or an Individual Retirement Account (IRA).
Before investing, it is important to research the fund’s performance, management, fees, and the underlying assets to ensure it aligns with your investment goals and risk tolerance.
Top 5 Precious Metals Mutual Funds
The following are the top five precious metals mutual funds, based on their performance, management, and investment strategies:
1. Fidelity Select Gold Portfolio Fund (Ticker: FSAGX)
- Five-year average annual total return: 10.75%
The Fidelity Select Gold Portfolio Fund primarily invests in companies engaged in gold mining and related activities. The fund has a diverse portfolio that includes large, mid, and small-cap companies, providing a balanced exposure to the gold industry. The fund’s management team has extensive experience in the precious metals sector, making it a popular choice among investors seeking exposure to the gold market.
2. Allspring Precious Metals Fund (Ticker: EKWAX)
- Five-year average annual total return: 9.84%
The Allspring Precious Metals Fund seeks long-term capital appreciation by investing in a diversified portfolio of precious metals and minerals-related securities. The fund’s investment approach focuses on identifying companies with strong growth potential, attractive valuations, and solid fundamentals. The fund’s management team has a long history of delivering consistent performance, making it an attractive option for investors looking to diversify their holdings in the precious metals space.
3. USAA Precious Metals and Minerals Fund (Ticker: USAGX)
- Five-year average annual total return: 8.95%
The USAA Precious Metals and Minerals Fund invests primarily in the stocks of companies engaged in the exploration, mining, and processing of precious metals and minerals. The fund’s strategy focuses on identifying undervalued companies with strong growth potential, making it an appealing choice for investors seeking exposure to the precious metals sector with a value-oriented approach.
4. Gabelli Gold Fund (Ticker: GLDAX)
- Five-year average annual total return: 8.51%
The Gabelli Gold Fund focuses on investing in a diverse range of companies involved in the gold industry, including mining, processing, and exploration. The fund’s management team employs a fundamental, bottom-up research process to identify high-quality companies with strong growth prospects. The fund’s consistent performance makes it a solid choice for investors seeking exposure to gold-related securities.
5. Invesco Gold & Special Minerals Fund (Ticker: OPGSX)
- Five-year average annual total return: 8.25%
The Invesco Gold & Special Minerals Fund invests primarily in companies involved in the exploration, mining, and processing of gold and other precious metals. The fund employs a bottom-up, value-oriented approach to stock selection, focusing on companies with strong financials and attractive valuations. Its consistent performance and diverse portfolio make it an attractive option for investors seeking exposure to the precious metals industry.
Are Precious Metals a Good Investment?
Precious metals can be a good investment for several reasons:
- Diversification: Investing in precious metals can help diversify your portfolio, reducing the impact of market volatility and potentially enhancing overall returns.
- Inflation hedge: Precious metals, particularly gold, are often seen as a hedge against inflation, as their value tends to increase when the purchasing power of currencies declines.
- Safe-haven asset: During times of economic uncertainty or geopolitical tensions, investors often turn to precious metals as a safe-haven asset due to their historical store of value.
- Currency hedge: For international investors, precious metals can provide a hedge against currency fluctuations.
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What Are the Best Precious Metals to Invest in?
The best precious metals to invest in depend on your investment objectives and risk tolerance. The four most popular precious metals are:
- Gold: Gold is the most well-known precious metal and is often seen as a safe-haven investment. It has a long history as a store of value and can provide a hedge against inflation and currency fluctuations.
- Silver: Silver is more volatile than gold but has a wide range of industrial applications, which can drive demand and price appreciation. Silver may also benefit from increased interest in green technologies due to its use in solar panels and electric vehicles.
- Platinum: Platinum is a rare precious metal with applications in the automotive, jewelry, and industrial sectors. Its scarcity and demand from various industries can lead to price appreciation.
- Palladium: Palladium is primarily used in the automotive industry for catalytic converters, with additional applications in electronics and dentistry. Its demand is driven by the need for cleaner emissions and the growth of the electric vehicle market.
Who Should Consider Investing in Precious Metals Funds?
Investors who should consider investing in precious metals funds include:
- Those looking to diversify their investment portfolio and reduce overall risk.
- Investors seeking a hedge against inflation, currency fluctuations, or economic uncertainty.
- Individuals interested in exposure to the precious metals industry without directly investing in individual stocks or physical metals.
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Summary
Precious metals mutual funds offer an attractive investment opportunity for individuals looking to diversify their portfolios and gain exposure to the precious metals sector.
Our top five funds – Fidelity Select Gold Portfolio Fund, Allspring Precious Metals Fund, USAA Precious Metals and Minerals Fund, Gabelli Gold Fund, and Invesco Gold & Special Minerals Fund – have demonstrated consistent performance and provide a balanced exposure to the industry.
Investing in precious metals can help protect against inflation, currency fluctuations, and economic uncertainty.
Determining the best precious metals to invest in depends on your investment goals and risk tolerance, with gold, silver, platinum, and palladium being the most popular options.
Precious metals funds are suitable for investors looking to diversify their portfolios, hedge against market risks, and gain exposure to the precious metals industry without directly investing in individual stocks or physical metals.
