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Number Cruncher

Glittering returns limited to bullion funds Add to ...

What are we looking for?

Leaders and laggards among precious metals bullion and equity funds this year.

Given that the price of gold has retreated from a record high of over $1,920 in September, let’s see how these funds stack up. Gold is up about 25 per cent this year.

The screen

We ranked the eight best and eight worst performers for the first 10 months of this year. U.S. dollar, segregated and duplicate versions of the funds were excluded.

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What did we find?

Bullion outshining precious metals equity funds.

And some bullion funds outshining other bullion peers despite investing in the same metal.

Claymore Gold Bullion [hedged]exchange-traded fund , led the way with a 21.5-per-cent gain followed by Sprott Gold Bullion, up 19.5 per cent and BMG Gold Bullion, up 18.6 per cent. All funds store their bullion at ScotiaMocatta, the precious metals unit of Bank of Nova Scotia.

The return differences can stem from a fund’s fees, which eat away at returns. Performance can also be affected by whether a fund hedges its exposure to U.S. dollars, which is how gold is priced; what price bullion is purchased at; and whether a fund can and does invest in other metals or stocks as well.

Lower fees helped Claymore Gold Bullion, which charges 0.56 per cent, and Sprott Gold Bullion, which charges 1.2 per cent. BMG Gold Bullion’s higher 3.1-per-cent fee includes a 1-per-cent “trailer fee” commission paid to financial advisers versus 0.50 per cent for the Sprott fund.

Mackenzie Universal Gold Bullion Class, which gained 17.5 per cent, is nearly all invested in gold bullion but has tiny amounts in platinum, silver and palladium too. BMG Bullion, up 8.1 per cent, is invested in gold, silver and platinum.

But CI Signature Gold Corporate Class, up 5.7 per cent, and Dynamic Strategic Gold Class, off 1.7 per cent, have less glitter to their numbers because they hold bullion and stocks. The CI fund even held about 16-per-cent cash recently.

All precious metals equity funds, however, have been in the red this year as their stocks have been pummelled in the market downdraft. They have also been hurt by profit-taking and concerns about the miners’ margins and the sustainability of a surging gold price.

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