A Structural Analysis of the Alternative Mutual Fund SGGDX


Dec. 31 2015, Updated 10:06 a.m. ET

Precious metal fund

The First Eagle Gold Fund Class ­A (SGGDX) provides investors with exposure to gold and, to a limited extent, other precious metals. The fund invests at least 80% of its net assets in gold and gold-related securities such as companies principally engaged in the exploration, mining, marketing, and distribution of gold. SGGDX is an alternative mutual fund as it directly invests in gold and gold-related securities, unlike traditional mutual funds. Gold is a global asset and serves as a potential hedge against the consequences of unforeseen catastrophic events.

The benchmark for SGGDX is the FTSE Gold Mines Index, which encompasses significant gold mining companies and reflects the performance of the overall gold and precious metal market. The chart above compares the market performance of SGGDX with its benchmark index as of November 30, 2015.

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Falling metal markets

The gold market is affected adversely by the bearish trend in the metal and the mining sector, which is primarily due to China’s slowing economic growth and increased investment in production. Therefore, SGGDX and its benchmark have both witnessed negative growth over the period shown in the graph. It should be noted that SGGDX has managed to outperform its benchmark.

SGGDX: A brief

The First Eagle Gold Fund Class ­A (SGGDX) is currently being managed by Matthew McLennan from First Eagle Investment Management. The fund had a net expense ratio of 1.3%, which includes the fund manager’s stated fee of 0.75%. Randgold Resources (GOLD), Agnico-Eagle Mines (AEM), Thor Industries (THO), Royal Gold (RGLD), and Newmont Mining (NEM) are some of the top holdings of SGGDX.

We’ll look at the current and estimated future trends of SGGDX’s top holdings in the next article.


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