The vehicle invests in gold, mining and precious-metal related shares, and should generally be used for diversification, due to its volatility.
The fund’s performance has waned of late – it fell just over 5 per cent in the second quarter, while gold bullion experienced an increase of 5 per cent in sterling terms. Its FTSE Gold Mines benchmark fell by 6.8 per cent, however, so manager Evy Hambro is still adding value.
Performance of fund vs index over 1-yr
Source: FE Analytics
"Gold equities have underperformed gold bullion year-to-date due to the intensity of the pressure applied on the equity market from macro economic concerns," Hambro explained.
"As a result, gold equity valuations are in historically low ranges but earnings expansion on the back of elevated gold prices and growth in dividends could well catalyse a re-rating."
Recent volatility in the price of silver has put pressure on stocks such as Hochschild and Fresnillo, which contributed to the fund's underperformance. Hambro has kept the holdings in his portfolio, though, saying they are high-quality silver producers with relatively low production costs.
Performance of funds vs index over 5-yrs
Source: FE Analytics
The fund, which has an FE Risk Score of 152, has taken on a lot more volatility than the gold spot price over the past one, three and five years, while delivering lower returns, so investors should be prepared for a rough ride.
It is still one of the best-performing vehicles in the IMA universe and generally competes closely with peers such as Smith & Williamson Global Gold and Resources and CF Ruffer Baker Steel.