According to Morningstar Inc., Chicago, precious metals funds have gained nearly 20 percent a year for the past three years, while most stocks have stumbled. Generally, this strong performance has been due to higher gold prices.
Although you can buy gold coins or bullion directly, most investors prefer mutual funds, which can be bought and sold easily. Funds recommended by financial advisors include:
- Vanguard Precious Metals Fund, which focuses on large, low-cost gold mining companies with solid balance sheets. From 15 percent-30 percent of its assets may be in platinum and palladium mines.
- USAA Precious Metals and Minerals Fund, which normally invests at least 80 percent of assets in the equities of companies engaged in gold exploration, mining, or processing. The remainder of its assets may be invested in other precious metals and minerals.
- American Century Global Gold Fund, which has a low expense ratio, an extremely important advantage in any actively managed fund. This is a pure gold fund, with no exposure to other metals.
