Gold funds lead the losers of 2013’s first half


Gold funds dominate the list of the worst performing funds over 2013’s first six months after the yellow metal suffered a massive sell-off in the opening half of the year.

Angelos Damaskos’ £7.6m MFM Junior Gold fund, which invests in small to mid caps that specialise in gold exploration and mining, was hit by the biggest loss between January and June, falling by 59.03 per cent according to FE Analytics.

Gold was subject to a significant sell-off after Federal Reserve chairman Ben Bernanke said the central bank could start to slow its $85bn-a-month bond-buying programme if the US economy continues to improve as expected. In the second quarter alone, the price of gold slumped by 23 per cent.

Click here to discover the 20 worst performing funds of 2013’s opening half

Seven of the 10 weakest performing funds over the first half focus on gold-related investments, with the remaining three concentrating on mining and natural resources.

David Baker and Trevor Steel’s £172.2m CF Ruffer Baker Steel Gold fund was the second worst performing fund of the first half after losing 56.08 per cent while Ian Williams’ £4.5m WAY Charteris Gold Portfolio fell by 50 per cent and came in third.

In fourth was Peter Webb’s £4.5m SF Webb Capital Smaller Companies Gold fund with a decline of 45.67 per cent and Evy Hambro’s £1.6bn BlackRock Gold & General fund took fifth place after losing 43.31 per cent.

In an update on 14 June, Damaskos said: “Gold still merits a place in every portfolio as an insurance policy and, as we have seen in recent times, a small shift in investors’ sentiment can cause large price changes in the yellow metal.

“We are increasingly optimistic for a higher gold price in the second half of the year and, consequently, a rerating of gold mining shares.”

Last month’s Bank of America Merrill Lynch Fund Manager Survey showed asset allocator’s weightings to commodities fell to their lowest on record with a net 32 per cent of managers taking an underweight, as a commodity price collapse became one of their biggest fears.

Chelsea Financial Services managing director Darius McDermott says: “The psychology of investing means it’s very difficult to buy when you’ve been beaten up and gold equities have been smashed into smithereens. Gold’s been bad and gold equities have been disastrous. I personally am sticking with gold equities.

“Given the pasting they’ve taken it’s hard to stick with them but the discount between gold equities and gold spot is at record levels. If you are a believer in gold, then gold equities present an extraordinarily cheap opportunity for accessing the asset class. But you think gold is a busted flush, get out of gold equities – it’s as simple as that.”

Click here to discover the 20 worst performing funds of 2013’s opening half