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3 Gold Mutual Funds You Should Have in Your Portfolio

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Gold futures for December delivery surged to its highest level since April 2013 on Aug 23. The yellow metal’s price rose 1.9% to $1,537.60 per ounce, following worsening trade relations between the United States and China. Last week, the Trump administration slapped an additional 5% duty of $550 billion worth of Chinese goods after China announced retaliatory tariffs on $75 billion worth of U.S. products.

Further, this protracted trade dispute between two of the world’s largest economies has roiled the markets across the globe. Also, slowdown in some of the major economies of the world has resulted in investors buying in and out of gold.

Meanwhile, gold prices surged to a more than 6-year high on Aug 26, to $1,550 an ounce. However, positive developments on the trade war front boosted the stock markets and Spot gold pared gains to rise 0.2% to $1,529.12 per ounce. President Donald Trump announced on the sidelines of the G7 summit in France that officials from China had showed interest in returning to negotiations.

Experts, however, believe that gold prices will continue to rise in the days to come. Let us discuss how.

Gold Will Continue to Glitter

On Aug 23, Fed Chair Jerome Powell announced at the annual central banking symposium in Jackson Hole, the central bank will take necessary steps to continue the phase of business expansion in the U.S. economy, which has already lasted an impressive 11 years.

Market watchers are speculating that such comments from Powell hint at another round of rate cuts in the next FOMC meeting due Sep 17-18. The CME FedWatch predicts a 99.6% probability of a second rate cut in the next meeting.

Analysts also believe that positive trade developments between the United States and China are just words after all. Till these words are not converted to actions, any improvement in trade related developments are misleading. This is evident from the fact that nothing satisfactory has been achieved on the trade war front in its more than a year-long existence. Further, the market’s fear index, has been wobbly throughout the year.

In the absence of a proper trade deal, which many experts believe is far out of sight; global economic fundamentals are expected to further weaken, providing the necessary boost to the yellow metal. Gold prices are expected to rise as high as $1,800 an ounce in the days to come.

3 Best Choices

We have, thus, selected three gold mutual funds with a Zacks Mutual Fund Rank #1 (Strong Buy) and 2 (Buy) that are poised to gain from such factors. Moreover, these funds have encouraging year-to-date (YTD) returns. Additionally, the minimum initial investment is within $5000.

We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.

The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily the reasons why one should be parking money in mutual funds (read more:  Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

Invesco Oppenheimer Gold & Special Minerals Fund Class Y (OGMYX - Free Report)  seeks capital growth by investing 80% of its net assets in common stocks of companies that are engaged in mining and processing gold, precious metals and related ETFs. This is a non-diversified fund.

This Zacks sector - Precious Metal product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

OGMYX has a Zacks Mutual Fund Rank of #1 and an annual expense ratio of 0.92%, which is below the category average of 1.39%. The fund has year-to-date (YTD) returns of 31.2%.

USAA Precious Metals and Minerals Fund Adviser Shares (UPMMX - Free Report)  targets capital appreciation and protects the purchasing power of capital against inflation. The fund does so by investing 80% of its assets in equity securities of U.S. and non-U.S. companies that are involved in mining and processing gold, precious metals and minerals etc.

This Zacks sector - Precious Metal product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

UPMMX has a Zacks Mutual Fund Rank of #2 and an annual expense ratio of 1.34%, which is below the category average of 1.39%. The fund has year-to-date (YTD) returns of 27.7%.

Invesco Oppenheimer Gold & Special Minerals A (OPGSX - Free Report)  fund is a non-diversified fund that seeks capital appreciation by investing 80% of its assets in common stocks of companies that are involved in mining and processing gold, precious metals and related ETFs and therefore may invest in all its assets in these securities.

This Zacks sector - Precious Metal product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

OPGSX has a Zacks Mutual Fund Rank of #1 and an annual expense ratio of 1.17%, which is below the category average of 1.39%. The fund has year-to-date (YTD) returns of 37.9%.

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