Funds that have had a relatively high exposure to gold have prospered over the last quarter (see table below). This table highlights the top five funds exposed to gold across all IMA sectors by rank over the past three months.
The results show a linear relationship between gold exposure and three month return exits, ie the more gold the fund has held the better it has performed.
| Name | 3 Month Return (%) |
Exposure to gold (%) |
| Smith & Williamson General Gold & Resources | 39.5 | 80.4 |
| BlackRock Gold & General | 30.1 | 80.2 |
| JPM Natural Resources | 18.1 | 41.6 |
| Close Beacon Investment | 13.0 | 12.1 |
| First State Global Resources | 10.2 | 25.4 |
Investors may want to get involved in this commodity more directly with a 100 per cent allocation given this linear relationship, and a range of options present themselves. The most popular of which are to buy: physical gold (i.e. bars, coins, jewellery etc), ETFs, ETCs, gold certificates, structured products, gold shares and gold accounts.
Financial Express Research favours ETFs, which are designed to track gold price on a daily basis, as they are the most liquid form of gold investing – volatility remains an important factor for many commodity prices and given the recessionary environment we are in, the more liquid the security the better.
This method has also been favoured by John Chatfield-Roberts who has recently upped his exposure to gold and currently holds a Physical Gold ETF at a 10.1 per cent inclusion in his Jupiter Merlin Balanced portfolio.
Chatfield-Roberts, like many fund managers, holds gold not only because he is bullish of its future price appreciation but also down to such securities denominated in US dollars. The US dollar is expected to continue to strengthen against the pound and thus investors could accentuate returns through holding the commodity in this way.
The biggest question remains as to whether gold will continue its upward trend – and although the price has since fallen from its eight month high of over $1000/oz – sentiment seems on gold’s side as cash returns are next to non-existent and equity markets remain uncertain.
Gold dominated portfolios may therefore continue to dominate performance tables in impending months whilst equity markets falter – investors may thus wish to pursue a short equity long gold trading strategy to enhance their returns in the short-term.
*Source of data: Financial Express Analytics