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Gold Mutual Funds to Diversify Your Portfolio

In a previous article on gold mutual funds, we explored the impact that holding a postition in gold mutual funds could have on the volatility and risk of your overall portfolio. The impact was not as great as you would think given the standard advice to hold a metals position to diversify your portfolio.

Here you can find our original article on diversifying with gold mutual funds.

But if you decide to use gold mutual funds in your portfolio, what are some of the options you can look at? Since this is a “static” position, it’s not so important that you have a good “trading vehicle.”

Of course, you can hold gold directly, but it has storage costs associated with it, has no associated revenue stream like dividends, and fairly steep transaction costs when dealing with smaller dollar amounts.

Fidelity has it’s Select Gold Fund (FSAGX), which has only a 30 day holding period. This is actually a fund of gold mining companies and other companies related to the industry, and not a direct holding in gold but should track somewhat closely.

Some exchange traded funds for gold are GLD and IAU. GLD attempts to actually track the price of gold bullion, while IAU is the iShares fund designed to do the same thing.

American Century has its (BGEIX) which is similar to Select Gold in that it holds stocks of gold mining companies. It does have a short term redemption fee on a sliding scale. The Bull and Bear Miday Fund (MIDSX) invests at least 65% of assets in securities of companies primarily involved in mining, processing, fabricating, distributing or otherwise dealing in gold, silver, platinum or other natural resources, and it has a short term redemption fee as well.

AIM has AIM GOLD (FGLDX). This fund normally invests at least 80% of net assets in equity securities of companies which involved in exploring for, mining, processing, or dealing and investing in gold, gold bullion, and other precious metals such as silver, platinum, and palladium, as well as diamonds. It may also invest up to 100% of total assets in securities of non-U.S. issuers. The fund currently offers A, B, C and Investor classes, all of which differ in fee structure and availability. This fund was previously know as Invesco Gold & Precious Metals Fund.

If you are looking for some leverage in your gold holdings, Profunds has the the Precious Metals Ultrasector fund, which targets daily investment results that correspond to 150% of the daily performance of the Dow Jones Precious Metals index. If that’s not exciting enough for you, the Short Precious Metals targets fund daily investment results that correspond to the inverse of the daily performance of the Dow Jones Precious Metals index, that is it goes down when the index goes up.

So, if you are looking for some gold mutual funds to diversify your portfolio, this should get you started.

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