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What Is Alternative Precious Metal Fund VGPMX’s Investment Strategy?

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Nov. 20 2020, Updated 3:17 p.m. ET

Metal and mining fund

The Vanguard Precious Metal and Mining Investment Fund (VGPMX) is an alternative mutual fund that invests more than 80% of its net assets in foreign and US companies principally engaged in the exploration, mining, marketing, and distribution of gold, silver, platinum, diamonds, and other precious and rare metals and minerals.

The Vanguard Precious Metal and Mining Investment Fund (VGPMX) seeks to achieve its investment goals through an alternative approach to investing in firms that are directly or indirectly related to precious metals. The graph below compares the year-to-date (or YTD) performance of  VGPMX with other similar alternative funds such as the First Eagle Gold Fund (SGGDX) and the US Global Investors Gold & Precious Metals Fund (USERX).

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Negative returns

Among the three funds, the VGPMX currently manages the highest net assets worth $1.5 billion followed by the SGGDX, which manages assets worth $754 million. The graph tracks the hypothetical growth of $100 invested in all three funds since January 1, 2015, until December 10, 2015. The metal and the mining sectors are currently in a bearish trend, adversely affected by the slowness of China’s growth. The VGPMX, the largest and the most invested fund in the sector, has performed the worst among the three funds. The VGPMX has given a total YTD return of negative 28.5% to its investors.

Top holdings

The top holdings of the Vanguard Precious Metal and Mining Investment Fund (VGPMX) include gold producing and processing stocks such as Nevsun Resources (NSU), Dominion Diamond (DDC), Agnico-Eagle Mines (AEM), Randgold Resources (GOLD), and Newmont Mining (NEM), among others. VGPMX primarily invests in mining and precious metal producing companies, but it also has some exposure to the chemical and environmental sector.

In the next article, we’ll look at VGPMX’s top five stocks and what analysts estimate for them.

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