Our returns are golden... and we don’t have a geologist in sight
RISING gold prices this year, helped in part by concerns over Brexit, have provided handsome returns for investors with money tied up in gold funds.
According to data analyst Trustnet, the top five performing investment funds across all sectors have had a focus on gold, recording one-year returns in excess of 100 per cent.
Leading the way is little-known Charteris Gold & Precious Metals, which has delivered a 12-month return of 179 per cent.
Overshadowed for long periods by the £1.4billion Black Rock Gold & General fund, the manager of Charteris’s fund, Ian Williams, is enjoying his time in the limelight.
In a dig at this bigger rival, which employs teams of analysts and geologists to aid fund manager Evy Hambro, he says: ‘We’ve delivered our performance without a geologist in our office.
‘Also, our small fund is nimble, unlike some of our rivals that resemble cruise ships which struggle to get into port.’
Though Charteris Gold & Precious Metals was launched more than six years ago, it has failed to attract great investor interest, for a variety of reasons. The fund was launched just as the gold price started to slide, which meant it got off to an inauspicious start. Indeed, like all gold funds, it has lost investors money over the past five years – though not as much as some rivals.
It is only this year that the fund has begun to prove its worth as the gold price has bounced back.
Being new and run by a Citybased boutique investment house (Charteris Treasury Portfolio Managers) that is unknown to most financial experts, the fund also did not register on the radars of most investment advisers.
But with a period of strong performance behind it and its appearance on some of the leading investment fund platforms, Williams is confident that a corner has been turned. He also believes that the rally in the gold price has a way to go, especially if interest rates remain low and economic uncertainty remains in the air.
‘Most UK investors don’t have sufficient exposure to gold, or gold shares,’ he says. ‘It’s a misunderstood asset class and seen as speculative. But I passionately believe it has a role to play in a balanced investment portfolio. Its performance is inversely correlated to most other assets, which means it is a great portfolio diversifier.’
Like other gold funds, Charteris does not hold physical gold. It gets its exposure to gold by holding stakes in global mining firms.
Some of its two dozen holdings are FTSE100 companies – such as Fresnillo, Polymetal International and Randgold Resources.
Williams says he has all the access he needs to identify potential investments and monitor existing ones.
He adds: ‘Most of the chief executives of the firms we invest in spend time in London before heading off to precious metal conferences in Europe. We get to meet them and chew the cud.’
Apart from gold mining firms, Williams has exposed the fund to companies with silver mining interests. As with gold, he is bullish on the price of silver.
‘Few people know that you can’t make a solar panel without silver,’ he says. ‘It’s one of the few commodities around that is not suffering from a supply glut.’
Charteris, of which Williams is chairman, currently manages assets of £140million on behalf of private clients. Some £40million of this is in four investment funds. A fifth fund, with a bond investment theme, is scheduled to be launched before the year is out.