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SGGDX’s 2015 Performance: A Peer Comparison

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SGGDX’s investment methodology

The primary risk of investing in gold is that its prices are susceptible to changes in US and foreign taxes, currencies, mining laws, inflation, and other market conditions. The First Eagle Gold Fund Class ­A (SGGDX) is an alternative mutual fund that invests more than 80% of its net assets in gold and gold-related companies. One-fifth of the fund’s net assets is invested in fixed-income instruments, short-term debt instruments, and other precious metals and mining funds. The fund also makes use of various derivative contracts for gaining leverage exposure in gold-related securities.

The graph above compares the three-year historical return performance of SGGDX with that of other similar funds such as the Vanguard Precious Metals and Mining Investment Fund (VGPMX) and the Tocqueville Gold Fund (TGLDX).

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Performance comparison

All three precious metal funds suffered severe setbacks over the given period. Among the three funds, SGGDX has managed to limit its losses. The annualized three-year returns of SGGDX, VGPMX, and TGLDX are -24.6%, -25.6%, and -26.8%, respectively.

Valuation multiples

The average dividend yields of SGGDX, VGPMX, and TGLDX are 1.1%, 2.7%, and 0.81%, respectively. The average price-to-cash flow ratios of SGGDX, VGPMX, and TGLDX are 8.3, 6.3, and 5.6, respectively. The fund’s holdings primarily include stocks that are into the mining, processing, and exploration of gold. Some of SGGDX’s top holdings include stocks such as Franco Nevada (FNV), Barrick Gold (ABX), New Gold (NGD), and Magnetek (MAG). A detailed analysis of SGGDX’s holdings is given in the next article.

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