Wall Street's Best Bet for Crisis-Beating Returns

By: Adrian Ash | Fri, Jan 6, 2012
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So how did the top US mutual funds stack up vs. the gold price since 2007...?

Past performance is no guide to the future. But if you don't study history, just what will you track instead?

December 2011 marked the fifth anniversary of the end of Ownit Mortgage Solutions - a small lender in the big scheme, but "maybe the canary in the coalmine," according to one mortgage-backed security manager back at the end of 2006.

Let's hope he found a new career in short order. Because come March 2007, tittle-tattle claimed that distress was spreading from the subprime collapse to US and Eurozone hedge funds. In July, news leaked and then broke of the collapse of two hedge funds at Bear Stearns, and the permanent emergency had begun.

What fun lay ahead! With the gold price at just $650 per ounce too! Silver was knocking around $13 the ounce. Together, that's made for quite the track record since...

The Top US Fund Managers: Annualized Returns in Per Cent
  Silver¹ Gold No. of funds beating top precious² Top US mutual³ Top fund's return Ave. fund return
10 years 20.08 19.00 11 USAGX 27.01 0.63
5 years 16.92 20.03 1 OSFDX 40.68 0.63
3 years 37.54 21.88 7 OSFDX 67.57 11.64
1 years -8.00 11.65 195 GVPIX 44.31 -1.99

¹ US Dollar precious metals prices from the LBMA, periods ending 30/12/2011.
² Fund count by BullionVault, using Lipper data via WSJ Online.
³ Single-best fund, best return & average return of all mutual funds taken from MorningStar.

USAA Precious Metals & Minerals you probably know. Co-manager Mark Johnson stepped down last month, leaving Dan Denbow to continue running the single-best performing US mutual of the last 10 years. Other big precious-metal miner funds pack the list of 11 mutuals to outperform silver and the gold price.

GVPIX you might expect to know too, what with it delivering 44% returns in calendar-year 2011. ProFunds US Government Plus led a bunch of long Treasury-bond portfolios. The old Lehman's TLT tracker returned 34% - who needed active management, let alone risk, last year?

But the stand-out fund over both the last 3 and the last 5 years? The only mutual to beat gold for US investors since the eve of this crisis is Oceanstone. Don't feel hard cheated if you've never heard of it. Apparently it's got less than $15 million in assets, even though the minimum investment is $3,000. Its stellar 5- and 3-year records include a ridiculous 264% made in 2009, just from doing what it does - seeking value in common stocks on the NYSE.

Yes, it can be done. And yes, it could be done too. US investors really could beat gold since the alarm bells rang out at the turn of 2007. Because out of the 7,500 separate funds available - with 22,000 shares classes to choose from - one fund managed it. Just like 7 funds (go on, count 'em) managed to beat silver since the turn of 2009, and fully 11 separate US mutual funds managed to beat silver since the start of 2002.

 


 

Adrian Ash

Author: Adrian Ash

Adrian Ash
BullionVault.com

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the head of research at BullionVault, where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

About BullionVault

BullionVault is the secure, low-cost gold and silver exchange for private investors. It enables you to buy and sell professional-grade bullion at live prices online, storing your physical property in market-accredited, non-bank vaults in London, New York and Zurich.

By February 2011, less than six years after launch, more than 21,000 people from 97 countries used BullionVault, owning well over 21 tonnes of physical gold (US$940m) and 140 tonnes of physical silver (US$129m) as their outright property. There is no minimum investment and users can deal as little as one gram at a time. Each user's unique holding is proven, each day, by the public reconciliation of client property with formal bullion-market bar lists.

BullionVault is a full member of professional trade body the London Bullion Market Association (LBMA). Its innovative online platform was recognized in 2009 by the UK's prestigious Queen's Awards for Enterprise. In June 2010, the gold industry's key market-development body the World Gold Council (www.gold.org) joined with the internet and technology fund Augmentum Capital, which is backed by the London listed Rothschild Investment Trust (RIT Capital Partners), in making an $18.8 million (£12.5m) investment in the business.

For more information, visit http://www.bullionvault.com

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