2 best-selling gold mining funds

There have been lots of asset classes that have performed strongly this year, but the one that has attracted the most attention is gold. The precious metal opened in January at just over $2,600 an ounce and recently sailed past $4,000 for the first time ever, generating a year-to-date gain of over 54%. Please remember past performance is not a reliable indicator of future returns.

Gold is a great diversifier and there are various instruments that are designed to track the price such as iShares Physical Gold, which is the most popular ETF on the Fidelity Personal Investing platform so far this year. Another way is to invest in a specialist gold mining fund.

An increase in the price of gold should result in higher earnings for the companies mining it, although it is not a perfect correlation, as there are lots of other factors at play including operational issues and cost inflation. Funds of mining stocks tend to be more volatile and can rise or fall more than the precious metal, so investors need to think carefully about which option suits them best.

• Read: What is the best way to invest in gold - ETFs or gold miners?

For those who want to go down the mining route there are two popular examples that might be worth considering. The first is Ninety One Global Gold, a member of the Select 50 that made it into ninth place on the list of bestselling ISA funds in September, while Jupiter Gold and Silver just missed out and finished twelfth.

Ninety One Global Gold

The £592m Ninety One Global Gold Fund is described as a specialist, benchmark agnostic, gold equity fund that aims to provide capital growth over holding periods of at least five years. It invests a minimum of two-thirds of the portfolio in the shares of companies around the world involved in gold mining and in related derivatives.¹

Manager George Chevely is a commodity expert who works for a business with a long history of running gold funds. His employer, Ninety One, has its roots in South Africa, where having an understanding of gold and gold mining companies is highly valued.²

At the end of September, the portfolio consisted of 33 stocks, with gold being the key sector accounting for 86.8% of the assets and silver a further 6.7%.³ Over the last five years the fund has delivered an annualised return of 15.7%.⁴

According to his latest update, Chevely remains very positive on gold and thus the shares of gold producers, which are enjoying record margins and strong cashflows.

“We have believed for some time that the market has been underestimating the potential persistence of the strong margins precious metals producers are achieving. Recent share price developments indicate the market is starting to revise its view.”⁵

• More on Ninety One Global Gold

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Overseas investments will be affected by movements in currency exchange rates. Investments in emerging markets can be more volatile than other more developed markets. Select 50 is not a personal recommendation to buy or sell a fund. Ninety One Global Gold and Jupiter Gold and Silver invest in a relatively small number of companies so may carry more risk than funds that are more diversified. Both funds use financial derivative instruments for investment purposes, which may expose them to a higher degree of risk and can cause investments to experience larger than average price fluctuations. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.