VGPMX’s Performance Has Disappointed So Far in 2015


Nov. 20 2020, Updated 1:48 p.m. ET

More pain for copper and gold

The S&P Global Custom Metals and Mining Index has been one of the worst-performing indexes in the US market since January 2015. China, a major consumer of metals, has observed a slowdown in its growth, which has affected the performance of this sector. Oskar Lewnowski, the CIO of metals and mining fund Orion Resources, recently stated that copper and gold prices are likely to be in a bearish trend for three more years. The Vanguard Precious Metal and Mining Investment Fund (VGPMX) is an alternative mutual fund that is invested in companies engaged in the exploration, mining, marketing, and distribution of various precious metals.

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Reduced returns, reduced volatility

The graph above compares the year-to-date (or YTD) performance of VGPMX and the S&P 500. VGPMX’s poor run has resulted in returns of negative 7.5% as opposed to the S&P 500’s YTD return of 1.4%. However, it is noteworthy that the addition of the VGPMX has caused a reduction in the overall volatility of the S&P 500. The top holdings of the Vanguard Precious Metal and Mining Investment Fund (VGPMX) are Nevsun Resources (NSU), Agnico-Eagle Mines (AEM), Randgold Resources (GOLD), Dominion Diamond (DDC), and Genpact (G).


Funds such as the VGPMX have been in a bearish trend for the past couple of years. It is important to remember that profit can also be made in a falling market by using the benefit of leverage and short selling. The precious metal market is facing the heat of the slow global economy. Almost all stocks in the business of producing, mining, and marketing precious metals are on a downward trend. Investors should invest in such funds only after understanding their risk-taking capacity. To read about alternative funds and their strategies, see Credit Suisse Commodity Return Strategy Fund Class A (CRSAX).


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