Fund in Focus - BlackRock Gold & General fund
Andy Parsons, advice team manager at The Share Centre, outlines to investors the benefits of investing in gold via a fund, rather than the commodity itself, and why they might want to consider the BlackRock Gold & General fund.
"It cannot have escaped most investor's attention that gold touched new all-time highs during June and continues to retain strength in its price. However, for investors wishing to participate in natural resources, one of the first key decisions they need to make is whether they wish to invest indirectly via companies involved with the overall operations or directly via the physical commodities themselves.
"The BlackRock Gold & General fund invests in companies that are exposed to gold mining and therefore tend to have a higher degree of liquidity as opposed to investing directly in the physical product itself. The fund is not solely focused on gold, the fund manager Evy Hambro has the ability to identify and invest a maximum of 30% of the fund in mining and other precious metals. Gaining exposure to gold via a fund can mean that your returns are not only reliant on the demand for the asset, but also the management of the mining company and how they manage the raw material.
"Overall, the fund has a low turnover rate compared to many of its peers, and this is borne out in its slightly longer term approach. The approach to investing is based on numerous company visits and a knowledge and perspective of how the team view the key drivers to the gold and precious metals markets.
"This fund is suitable for those investors that wish to have some form of commodity exposure within their portfolio without having to invest directly within the commodity. Investors should also consider the potential risks associated with such investments; namely the potential impact of currency fluctuation and "political risks. As this is a sector based fund and one that is specifically aimed at natural resources, investors may find that the fund price tends to be more volatile than many others.
"The BlackRock Gold & General fund has an annual charge of 1.75% and an initial charge of 5%. The minimum initial investment is £500 and the minimum additional investment is £100.
"As the fund features in The Share Centre's Platinum 120 range, customers of the retail stockbroker wishing to invest in the BlackRock Gold & General fund will not have to pay the initial charge or purchase dealing commission. Customers can also invest in the fund from as little as £10.
"In terms of performance, the fund has returned 208.56% over the past five years on a cumulative basis to 9 July 2010, whilst year to date it has returned 12.25%."