QikReview: Top Specialty-Precious Metals Mutual Funds

Below is a brief review of three Specialty-Precious Metals mutual funds.

USAA Precious Metals (USAGX)

Category: Specialty-Precious Metals
Rating: 4
Capital Gains Exposure: 50%
Assets: $1.1 bil
Expense Ratio: 1.21%
Turnover Ratio: 29%
Yield: 1.56%
Redemption Period: 0 days
Redemption Fee: 0.0%
3-Year Total Cost: $384
Minimum Investment: $3,000
Comments: This fund's returns are nothing short of outstanding: it ranks #1 in 10-year returns and in the top 10 for 3-year and 5-year returns; although it is only #35 in 1-year returns. Absolute returns though is what really caught my attention: 23% annually over 10 years, 34% over 5 years, 41% over 3 years, and 33% over 1 year! Volatility is certainly present though: it lost 11% in 2004 and I'm sure it wasn't so hot when the gold prices weren't plowing through the roof in other decades. This is a Mid-cap Growth fund that invests into Giant (5), Large (53), Medium (30), and Small (12) companies. It holds 5% in Cash and the rest in Stocks, with 80% of assets in Foreign Stocks. Its exposure is in Canda (51), the U.S. (15), South Africa (10), Australia (9), Peru (5), and Asia ex-Japan (11). With 46 holdings this fund is relatively concentrated. Turnover is also relatively low at 29%. It has 57% of assets in the Top 10 holdings. This is a good specialty fund, but it's definitely speculative. One of the key components for a success of such funds is a weak dollar. As the Fed will be forced to raise the rates back at the end of 2008 / beginning of 2009, dollar may strengthen. Also, this fund in particular, and gold in general, has been having too much fun lately, and I expect it to end or at least tamper off in 2008/2009.

U.S. Global Investor (UNWPX)

Category: Specialty-Precious Metals
Rating: 3
Capital Gains Exposure: 24%
Assets: $1.0 bil
Expense Ratio: 0.99%
Turnover Ratio: 54%
Yield: 10.51%
Redemption Period: 30 days
Redemption Fee: 0.5%
3-Year Total Cost: $332
Minimum Investment: $5,000
Comments: This fund is #1 among peers in the 5-year returns at 40%, but it is a horrible #68 in 10-year returns. It is very volatile, altough does perform very well when the market does well.
This Small-cap Growth fund invests into Large (12), Medium (45), Small (29), and Micro (15) companies. It invests into Industrial Materials (97). It has 6% in Cash. It has exposure in Canada (63), the U.S. (8), the U.K. (7), South Africa (3), and Australia (2). It has a very large number of holdings, 234, and reasonable turnover ratio of 54%. Fund's 36% of assets are in the top 10 holdings, which is not concentrated. This funds focus on small-cap stocks in the precious metals sector seems very risky in general and at this time in particular.

DWS Gold & Precious (SCGDX)

Category: Specialty-Precious Metals
Rating: 3
Capital Gains Exposure: 24%
Assets: $0.8 bil
Expense Ratio: 1.26%
Turnover Ratio: 52%
Yield: 3.51%
Redemption Period: 15 days
Redemption Fee: 2.0%
3-Year Total Cost: $397
Minimum Investment: $2,500
Comments: Middle-of-the-pack performance with high volatility. Although, arguably, rewards provided by this fund justify the volatility, I don't think so. This Mid-Growth fund invests into Giant (14), Large (38), Medium (31), and Small (17) companies. It has exposure in Canada (31), Australia (14), South Africa 913), the U.K. (6), and the U.S. (4). It has zero in Cash. It has a modest number of holdings - 43, and reasonable turnover ratio of 52%. This fund is a tier-2, in my opinion. Although, worth considering for various portfolio allocation models.

Other QikReviews:
Top Domestic Mutual Funds
Top Foreign Mutual Funds
Top Europe Stock Mutual Funds
Top Pacific/Asia ex-Japan Mutual Funds
Top Other Foreign Mutual Funds
Top Specialty-Natural Resources Mutual Fund