SURVEY - FTFM: Gold sets the standard for fund performance:
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globalarchive.ft.com
First-quarter league tables reflect the benefits of investing in the precious metal during a dip, writes Elizabeth Wine
Financial Times; Apr 8, 2002
By ELIZABETH WINE
Gold made a return to the spotlight as mutual funds investing in the precious metal claimed eight of the top 10 spots for best performance in the three months to the end of March, according to fund-tracker Lipper.
The two remaining funds - including the best performing fund overall - reached the top, because of large bets on small biotechnology companies.
Gold, also one of the top performing sectors last year, continued to shine as investors sought havens for their money amid increasing global conflict and a flat market for equities.
US Global Investors Gold Shares led the pack with gains of 52.4 per cent, followed by First Eagle SoGen Gold, up 50.4 per cent.
The average gold fund gained 35.2 per cent in the first quarter, according to Lipper.
American Heritage posted the first quarter's best performance, climbing 62.5 per cent. But the fund has come under criticism by analysts for being too volatile and risky.
Nearly 85 per cent of the fund was invested in the American Depository Receipts of Senetek, a thinly traded UK biotech company which focuses on dermatology and sexual dysfunction, according to the most recent portfolio information in Morningstar's database.
The fund fell 55.6 per cent last year, 30.8 per cent in 2000 and 31.6 per cent in 1999.
Russ Kinnel, head of fund analysis at Morningstar, wrote in February that the fund was having one of its "occasional rallies" but warned investors that it tended to fall afterwards.
Frontier Equity, the other non-gold fund in the top 10, also has a high concentration of stocks. According to Morningstar's most recent portfolio information, 20 per cent of its assets are in MacroChem, a small biotech company. The fund, which gained 43.4 per cent in the first quarter, was also criticised by Morningstar for being too risky. |
