"Flows into commodities spiked again in June, fueled exclusively by
precious metals funds (flows into all other commodities categories, except agriculture, were negative)," according to Morningstar's latest report.
Six energy-related ETFs and eight
precious metals funds met the criteria.
Purchasing the stock of gold mining companies or investing in
precious metals funds may provide some of the benefits of investing in gold without actually having to hold physical gold in an IRA.
A Morningstar category average for equity
precious metals funds was down nearly 21% for the year, a far cry from the run-up in gold prices over the same period.
While the Standard & Poor's 500 Index returned nearly 11% that year,
precious metals funds (which mainly own stocks of gold mining companies) lost more than 8%, on average.
equities, bonds and
precious metals funds, along with a big allocation to inflation-protected bond funds to 80-week high of $512 million in the week ended Nov.
Precious metals funds dominated the upper end of the Lipper league table of over 130 funds in the third quarter.
According to Lipper, a Thomson Reuters Research division, Gold and
Precious Metals funds domiciled in Europe delivered strong returns over one year (until end of April), increasing on average by 33.36 per cent in US dollar terms.
The authors find that flows into equity funds -- both domestic and international -- are negatively correlated with flows into money market funds and
precious metals funds. This suggests that investor rebalancing between cash and equity explains a significant amount of trade in mutual fund shares.
If you have a significant amount of wealth and are concerned about inflation it's not the end of the world to put 5% of your money in
precious metals funds, but not commodities."
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Precious metals funds returned 41.56%, on average.
WHAT MAKES
PRECIOUS metals funds so attractive is that they offer investors the ability to gain unleveraged exposure to gold and other precious metals without taking delivery of physical metal or trading futures contracts.
