4 Gold Funds To Shine Amid Coronavirus Threat

The new highs touched by gold in the past few days is a result of the mounting fears over the coronavirus outbreak, the deadly new respiratory disease that claimed more than 3000 lives until now and infected close to 90,000 globally. As scientists try to find a cure to this novel coronavirus, financial markets are suffering the consequences of investors’ woes. In addition, the inverted yield curve is persistently fuelling this anxiety.

This is why, amid the steep sell-off of equities and other assets, mutual fund investors could turn their attention to securities of gold and its related instruments in a bid to shield their investments from the market’s adversity.

Inverted Yield Curve Sparks Panic

The inverted U.S. yield curve since mid-February has made investors rush to safe-haven assets. The yield curve, which exhibits the relationship between interest rates and the time-to-maturity of short- and long-term U.S. Treasury bonds, reversed once again.

In such a scenario, long-term debt instruments offer lower yields than short-term debt instruments. To be precise, the rate of the three-month Treasury bond was reported as 1.13% on Mar 2 while that of the 10-year Treasury note is 1.10%.

COVID-19 Raises Rate Cut Hopes

As the number of coronavirus cases is on a constant rise, investors and businesses alike expect the Federal Reserve to adopt a more dovish stance. Last week, Fed Chair Jerome Powell said that while the country’s economy remained strong, the coronavirus “posed an evolving risk” and the Fed would take action if required.

Per the CME FedWatch Tool, there is 100% probability of a rate cut by the central bank in its next scheduled meeting on Mar 17-18. This expectation of a rate cut is supporting safe-haven assets, such as gold and other precious metals.

Gold rose more than 1% on Mar 2 with spot gold gaining 0.9% to hit $1,599.15 per ounce as of 0401 GMT.U.S. gold futures climbed 2.2% to reach $1,601.20.

4 Best Funds to Buy

We have, therefore, selected four mutual funds that invest in securities of companies engaged in gold and precious metals business. All of these funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) or #2 (Buy). In addition, the minimum initial investment for these funds is within $5,000.

We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund.

The question here is why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

Franklin Gold and Precious Metals Fund Advisor Class FGADX aims for capital appreciation. The fund invests the majority of its assets in the securities of companies that have gold and precious metals operations. The non-diversified fund invests across all market capitalizations.

This Zacks sector – Precious has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FGADX carries a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.73%, which is below the category average of 1.38%. It has returned 34.4% over a year. The fund has no minimum initial investment.

Franklin Gold and Precious Metals Fund Class A (FKRCX) aims for capital growth. The fund invests the majority of its assets in securities of companies that are engaged in operations of gold and precious metals. The non-diversified fund may invest across all market capitalizations.

This Zacks sector – Precious has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FKRCX carries a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.98%, which is below the category average of 1.38%. It has returned 34.1% over a year. The fund has a minimum initial investment of $1000.

Invesco Oppenheimer Gold & Special Minerals Fund Class Y OGMYX seeks capital growth. The fund, which mostly invests in common stocks, is mostly focussed on companies that are involved in mining, processing or operating in gold and other precious metals. OGMYX is a non-diversified fund.

This Zacks sector – Precious has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

OGMYX carries a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.92%, which is below the category average of 1.38%. It has returned 30.2% over a year. The fund has a minimum initial investment of $1000.

Fidelity Select Gold Portfolio (FSAGX) seeks capital appreciation. The fund invests the majority of its assets in securities of companies engaged in gold-related operations. FSAGX is a non-diversified mutual fund.

This Zacks sector – Precious has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FSAGX carries a Zacks Mutual Fund Rank #2 and has an annual expense ratio of 0.86%, which is below the category average of 1.38%. It has returned 27.7% over a year. The fund has no minimum initial investment.

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