Gold funds enjoy long-awaited bounce in July

MS-31July-CC.jpg

Following a corrosive first half to the year, gold and resources funds were among the best performers in July while emerging markets and Japan portfolios were among the steepest fallers.

July overall proved to be a far kinder to investors than June, with virtually all sectors registering positive returns. According to data from Charles Stanley Direct, the CF Ruffer Baker Steel Gold fund was the best performing fund in July with a total return of 16 per cent.

It was followed by Axa Framlington Biotech, up 15 per cent, and Way Charteris Gold Portfolio Elite, which was 14 per cent up. Other high achievers were Smith & Williamson Global Gold & Resources and BlackRock Gold & General, up 13 per cent apiece, while Investec Global Gold delivered a 12 per cent return.

It is a stark reversal of fortune for bullion focused vehicles which were among the worst performing funds over the first half of 2013, following a sharp sell-off of the precious metal.

Global demand for gold plummeted by almost 20 per cent in the first three months of the year compared with the final quarter of 2012. In April alone, some $1trn was wiped off the value of global reserves, spurred on by many believe a recommendation by investment banking giant, Goldman Sachs, to its clients to ‘short’ bullion, as it cut its long-term forecast for the precious metal.

Gold funds were hit hard by the crash and many saw their value collapse. The MFM Junior Gold fund, which invests in gold exploration and mining, was hit by the biggest loss between January and June, falling by 59 per cent.

Charles Stanley Direct pension and investment analyst Rob Morgan says: “For a number of months commodities and gold funds have featured in the bottom 10, but at last July provided a long-awaited bounce. Natural resources funds, notably those focused on gold miners recovered strongly though still stand a long way below their prices only six months ago.”

Emerging market focused portfolios were among July’s worst performers. Neptune India and Jupiter India, suffered the steepest falls, with each losing 5 per cent, while First State Latin America rounds off the bottom three funds with a 4 per cent loss.

Notably Japan funds are scattered across the bottom 10 funds for the month, with Invesco Perpetual Japan, Neptune Japan Opportunities, Fidelity Japan Smaller Companies and Threadneedle Japan all suffering a 1 per cent loss.

Sector-wise IMA Technology & Telecoms and European Smaller Companies were the two strongest overall with a 7 per cent average, while Europe (ex-UK) achieved 6 per cent.

Top 10 funds  
CF Ruffer Baker Steel Gold 16.41%
AXA Framlington Biotech 14.98%
WAY Charteris Gold Portfolio Elite 14.41%
BlackRock Gold & General 12.87%
Smith & Williamson Global Gold & Resources 12.51%
Investec Global Gold 12.30%
MFM Techinvest Technology 12.27%
Oceanic Natural Resources 10.91%
JPM Europe Smaller Companies 10.11%
Newton Continental European 9.86%
Bottom 10 funds  
Neptune India -5.13%
Jupiter India -4.81%
First State Latin America -3.53%
EFA AR Diversity Strategy Portfolio -2.12%
Aviva Property Investment -1.55%
Invesco Perpetual Japan -1.46%
Neptune Japan Opportunities -1.44%
Fidelity Japan Smaller Companies -1.43%
Threadneedle Japan -1.35%
Scottish Widows Latin American -1.29%

Source: FE Analytics 01/07/2013 to 31/07/2013; Charles Stanley Direct