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Investing in Gold Investment Funds by TrendFollower

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This week I received a letter from Fidelity advising me that one of my investment funds was closing which is the Barings Frontier Markets Fund. Now I used to invest in Merrill Lynch Gold & General which then turned into Blackrock Gold & General and JP Morgan Natural Resources. I sold them both a few years ago when Gold and Natural Resource companies were generally declining in price. 

However, I today switched my funds from Barings Frontier Markets Fund into Investec Global Gold Fund and will be adding per month using 'cost pound averaging'. Before deciding upon which Gold fund to switch to I came across many good ones on Fidelity's platform as below:

  • HC Chateris Gold and Precious Metals
  • Blackrock Gold & General 
  • Smith and Williamson Global Gold and Resources
  • Merian Gold and Silver Fund
  • Gold ETF's and Gold ETC's (Physical and Leveraged)

Now of course there are many different funds and investment trusts in relation to the asset Gold. The returns have been excellent recently. It is well documented in my posts that I am not a fan of Gold long term but during the short to medium term I see Gold as excellent addition to my investment portfolio just to add some defensive resilience to my investment portfolio in case things get ugly in the markets. It is sort of like an insurance policy if you like.

Now another reason I have gone for a Gold investment fund is that they invest in Gold mining companies (larger ones) but also junior ones. Now when Gold is in a bull market, gold mining companies offer a sort of leveraged bet on the price of Gold. They perform and deliver greater returns than Gold itself. I have experienced this many times in the past when I was a long term investor in Merrill Lynch and then Blackrock Gold & General and JP Morgan Natural Resources funds. So if Gold does perform like some of us are anticipating in the coming months and maybe the next year or two (remember bull markets can last longer than one thinks) then Gold investment funds should deliver greater returns than if one investing physically in Gold itself. This should enhance my returns for my investment performance. 

Now I totally accept that the closure of the Barings Frontier Markets Fund has forced my hand to switch that capital into another fund and hence has led to my investing in Investec Global Gold fund. Had the Barings fund not have closed then I most probably would not have invested in the Investec fund so that is some honesty from me. Also I am disclosing a real life investment switch that I have made and am openly sharing this with the IG Community. 

I am still trading Gold using IG's UK Spread Betting platform that those who are interested can view my Potential Long Gold Trade thread and the posts it contains. 

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There may be some of you who would rather invest directly in Gold mining companies. That is fine if you know what you are doing.

In my experience investing in Gold mining companies requires a lot of time and patience where as investments in Gold investment funds and trusts can reward investors in a shorter timeframe. The fund managers have access to data and material that the small investor just does not have and therefore the funds can identify better opportunities by conducting more effective due diligence. 


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