3 Precious Metals Funds to Buy as Investors Flock to Safe Haven Assets
A weak global economy has dampened investor sentiment, pushing gold and precious metals far ahead of equities. During times of economic uncertainty, investors dump equities and turn to safe haven assets like precious metals.
The economy isn’t the only factor driving investors to precious metals. Lower interest rates across the globe has made gold and precious metals more attractive. We’ve seen a 20% rally in these metals over the last year, so investing in mutual funds with precious metals exposure is a smart move. Mound gold and dollar bill, finance concept
Why Investors Are Betting on Precious Metals
There are three primary reasons why precious metals have lured in investors:
- Domestic growth is weak. The U.S. economy expanded by just 0.5% in the first quarter, marking its weakest quarterly growth since 2014. Consumer spending and sentiment is down, too. Investors pulled more money out of equities in April than it did since last the slump last summer.
- Global growth has been sluggish. The global economic outlook isn’t much brighter, with China and Britain releasing soft factory data.
- The timetable for Federal Reserve rate hikes is uncertain. With a slowdown in the job market, no one knows for sure when the Federal Reserve will raise rates. Lower interest rates make precious metals a more attractive investment compared to yield-bearing assets, like U.S. Treasuries.
3 Precious Metal Funds to Buy
With uncertain economic conditions and economists unsure of when the Fed will raise rates, now is a good time to invest in precious metals funds. Even major banks are bullish on these metals, gold in particular. Goldman Sachs (GS) projects gold to reach $1,200 an ounce in three months and $1,150 an ounce in 12 months.
These 3 mutual funds offer high year-to-date returns.
- Fidelity Advisor Gold A (FGDAX)
This fund invests a large percentage of its assets into companies that specialize in gold-related activities as well as coins and gold bullion.
FGDAX offers a year-to-date return of 65.9% and an annual expense ratio of 1.2%, which is lower than the industry average of 1.44%.
- American Century Global Gold A (ACGGX)
ACGGX invests most of its assets in companies that engage in the processing, mining, distribution and exploration of gold. The fund’s year-to-date return is currently 75.4% with an annual expense ratio of just 0.92%.
- Deutsche Gold & Precious Metals A (SGDAX)
SGDAX invests a large percentage of its assets in companies involved in activities related to gold, platinum, silver and other precious metals. The fund offers a year-to-date return of 69.4% with an annual expense ratio of 1.25%.
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