Gold and silver funds have topped the list of best-performing investment products so far this year, benefiting from a huge rise in the price of precious metals driven by fears over the global economy.
Precious-metal funds account for all 10 best-performing mutual funds in both the US and Europe, nearly doubling investors’ money during the first seven months of 2016, according to Morningstar, the data provider.
Concerns about global growth and loose monetary policy have pushed the gold price up in 2016. As prices fell, gold producers faced pressure to write down asset values and cut costs.
Ms Khizou said companies exposed to precious metals, such as miners, are now in “much better shape” after improving their profit margins by bringing down capital expenditure.
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The majority of the top-performing mutual funds this year invest in equities exposed to gold and silver, such as miners, rather than the physical metal.
The top-performing funds in the US include products from American Century, Franklin Templeton and ProFunds.
Investors in the Placeuro Gold Mines fund, the third-best performing fund in Europe this year, lost 21 per cent in 2015. “The conditions that are driving investors to gold are not going to go away any time soon,” he said.
Last week, the Royal Mint, which produces British coins, said there was a 50 per cent increase in sales of gold bars and coins during the first week of August, the week following the Bank of England’s decision to cut interest rates.
Ms Khizou said: “The fact that gold is seen as a hedge against the uncertain environment, and the fact that gold producers are making improvements in terms of their balance sheets, could drive more investors into the asset class.”
Ben Seager-Scott, director of investment strategy at Tilney Bestinvest, said the UK wealth manager is gradually increasing its exposure to physical gold, but not gold equities.
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