Precious metal mutual funds are relatively new instrument that allow people to invest in the commodity markets without going through the complicated commodity process. They are less risky and less volatile than conventional commodity markets since they are invested in a wider range of holdings and thus can better weather market fluctuations.
These funds can either invest in a single metal such as gold or platinum or can have holdings in a variety of metals. The funds often not only invest in the metals themselves, but also in companies that deal in the metals such as mining companies. Just like other mutual funds, some precious metal funds invest in more volatile, fast money options while others focus more on long term growth. Even with long term, well diversified funds, due to the volatility of metal commodities, these funds are considered among the riskiest of mutual funds.
These funds have recently become more popular as people seek a hedge against market volatility. Gold, silver and platinum have historically outperformed the market and often see their best gains when the market tanks. Many investors use such investment as a hedge against inflation. As people lose confidence in the American financial system, these funds become more and more popular.
There are currently three precious metal funds that shine above the rest. They are all proven performers, are stable and have shown good returns.
Two of the funds have been around a long time, as it applies to precious metals. The Fidelity Select Gold Portfolio and the Riversource Precious Metal and Mining A both place the majority of their holdings in gold and gold related industry. Both of these funds have a very low expense ratio and are well diversified.
The Van Eck International Investor’s Gold fund is newer with an inception of 1998. This fund also focuses on gold and has invested heavily in mining ventures. At times, 100% of the fund is invested in mining companies. It has a slightly higher expense ratio than the other two at 1.44%, but this is still considered excellent.
As the market continues to tank and U.S. government debt rises, people are flocking to precious metal investments. Gold has always been a standard of wealth, hence the term “gold standard” and it likely always will hold that title. PM funds are a good way for a casual investor to take advantage of metal’s stability.
Source by Bret Dashel
The Truth About Metal Mutual Funds
No comments:
Post a Comment