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How Gold Bullion Beat the Best Fund Managers

Commodities / Gold and Silver 2012 Jan 05, 2012 - 02:26 AM GMT

By: Adrian_Ash

Commodities

How a lump of gold bullion beat the City of London's brightest and best since 2007...

HOW QUICKLY time flies! The global financial crisis will mark its 5th birthday in 2012.


And now it's out of short trousers, let's see who coped best with the terrible toddler so far, starting with the City of London's top fund managers...

The UK's Top Funds vs. Bullion: Annualized Returns in Per Cent1

1 year

5 years

10 years

Gold2

16.72

26.07

18.18

Silver

1.74

22.44

20.03

Best UK fund sector3

Index-Linked Gilts

Greater China

Emerging Markets

Best sector's average

13.4

11.27

15.23

Single best-performing fund4

Henderson

Long-Dated Gilt

Quadris Forestry

BlackRock

Gold & General

Best fund's gain

31.63

17.03

22.38

No. of separate funds

beating gold

38

0

3

1Compound annual growth rate, including dividends and annual charges

2Bullion prices from London Bullion Market Association (16/12/11), storage costs from BullionVault

3Sector data from Investment Management Association (12 months to end-Oct)

4Fund data from MorningStar (UK domiciled, non-institutional, 16/12/11)

Many analysts and advisors will rightly tell you to beware chasing yesterday's winners. But physical bullion has proven to be uniquely suited to this financial crisis so far.

Over the 5 years to mid-December, gold bullion priced in Sterling returned 218% net of ongoing storage costs. Physical silver rose 175% after storage costs.

The best-performing UK-domiciled fund available to retail investors returned 120% over the same period, including dividends and ongoing fees. Funds in the best-performing sector, Greater China, averaged just over 70% growth.

Those China equity funds cost an average maximum of 4.6% in upfront charges. Buying gold or silver on BullionVault costs a maximum 0.8% in dealing fees.

So why gold and silver – so far, at least – for UK investors and savers since 2007...? Because they are physical property, rather than anyone else's financial promise, gold and silver cannot go bust, unlike Britain's ailing banks or even neighboring governments across the Channel. Silver and gold bullion are also rare and tightly supplied, unlike the flood of money from the Bank of England, franctically trying to prop up the UK's banking system.

So despite all the experience and expertise of the UK's fund management industry, in short, you would have done much better buying silver or gold on the eve of this crisis than entrusting your savings to the City.

US comparison to follow on Friday.

By Adrian Ash
BullionVault.com

Gold price chart, no delay   |   Buy gold online at live prices

Formerly City correspondent for The Daily Reckoning in London and a regular contributor to MoneyWeek magazine, Adrian Ash is the editor of Gold News and head of research at www.BullionVault.com , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2011

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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