Precious metal funds are best performers
By Elizabeth Wine in New York
FT.com site; Dec 12, 2002
For the second year in succession, the best performing mutual funds were those that invested in gold and those that bet against the stock market, while the funds losing the most money were the ones that kept the faith with technology and telecoms stocks.
According to fund tracker Lipper, nine of the top 10 mutual funds for the year so far were gold or precious metals speciality funds, returning between 47 per cent and 78 per cent.
The First Eagle SoGen Gold Fund claimed top honours, with returns of 78 per cent. Monterey OCM Gold was second best with gains of 66 per cent.
Rounding out the top five were the Gabelli Gold Fund, up 60 per cent, and the Tocqueville Gold Fund and Van Eck International Gold Fund, both of which rose by more than 58 per cent.
Other funds in the top 10 were those invested in the wider category of precious metals, such as the ING Precious Metals Fund, which climbed 47 per cent. A large part of the gains seen by those funds came from their gold stocks.
The Prudent Bear Fund was the only non-metals fund in the top 10, posting returns of 56 per cent by selling stocks short.
Gold funds have performed strongly through the bear market, with an average return of 31 per cent since the beginning of 2001, according to Lipper. But it is nearly impossible to predict whether they will continue to post such returns. The sharp rise in the price of gold is due to factors that may not last.
Bond funds were also a haven for loss-weary investors over the past year, with average returns of 5.49 per cent in the year to December 5, according to Lipper. Investors poured in an astonishing $125.6bn from January to the end of October, according to the Investment Company Institute. That compares with a net outflow of $26.5bn for stock funds in the same period.
The funds losing the most investor money in 2002 stayed true to the faded new economy. The 10 most battered portfolios, stuffed with ailing telecoms, biotech and general technology stocks, lost between 57 and 77 per cent in the year to date.
The Profunds Wireless Fund turned in the worst performance of the year, losing more than three-quarters of its value in that time.
Other bottom dwellers included Black Oak Emerging Technologies and Genomicsfund.com. The funds lost 64 per cent and 57 per cent, respectively.
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