Gold Managers Advices Caution Despite Huge Gains

By Czarina Ara Lasco

Oct 08, 2016 06:00 AM EDT

Albeit stunning performance this year, gold managers are living with fears about everything on a weak global economy to the possibility of a Trump's presidency advising possible investors not to be expectant in terms of huge returns.

Since 1980, this year marked gold's best first-half of a year after gold-related funds are stacked above the leader board for profits and returns. The average investments in stocks for gold miners have reached to more than 70 per cent only in 2016. According to Morningstar, such stunning performance has attracted even more investors wherein approximately $231 billion has discharged into funds allotted in purchasing either gold bars of the stocks of mining companies in the year to date through August.

However, despite this stunning achievement, gold fund managers warned anyone who wants to quickly seek for riches not to expect the prolongation of these types of earnings. According to the gold fund managers, investors must think of gold more as a type of insurance wherein something that will hold up when other parts of one's portfolio are crashing. As such, investing to gold should probably be only a small part of your portfolio, 5 per cent maybe.

"We often find ourselves needing to remind investors that just because we're up 100 per cent doesn't mean that you should be loading up," says Dan Denbow, Senior Portfolio Manager at the USAA Precious Metals and Minerals fund, which nearly doubled in the first six months of the year. "Having a win, you should consider it as a time to reconsider, not to double up."

Early in the year, investors were jittered about the weak global economy especially China's sharp slowdown. In June, however, Britain's vote to leave the European Union shocked markets around the world. Recently, the unbridled U.S. presidential campaign between Trump and Clinton has heightened uncertainty, which has sent even more investors into the perceived safety of gold.

"We always say you don't want too much of it," says USAA's Denbow, whose fund owns gold mining stocks. "Because of all the volatility, the tail starts wagging the dog, and you lose the diversification benefit because the volatility swamps what the rest of your portfolio is doing."

© 2024 VCPOST, All rights reserved. Do not reproduce without permission.

Join the Conversation

Real Time Analytics