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A Rundown of TGLDX: Structural Analysis

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TGLDX: a gold alternative mutual fund

Alternative mutual funds seek to mimic popular hedge fund strategies like global macro, event-driven, distressed debt, and merger arbitrage, among others, for achieving their investment goals. And funds such as the Tocqueville Gold Fund (TGLDX) allow investors to access to gold investments in particular. Traditional mutual funds cannot directly invest in gold or other precious metals because it would limit their investors to only equities and fixed-income debt instruments, whereas alternative funds such as TGLDX provide investors with an alternative route to gold investment by taking real positions in gold and gold-related securities.

The primary benchmark of TGLDX is the Philadelphia Gold/Silver Index, which is made up of thirty precious metal mining companies traded on the Philadelphia Stock Exchange. The performance comparison of TGLDX with its benchmark is given in the chart below as of the end of 2016.

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Historical performance comparison

The metal and mining sector had suffered serious downfalls in the last year due to various macroeconomic events such as falling crude oil prices, the strengthening of the US dollar, and the slowdown in China’s GDP growth among others. Meantime, the Philadelphia Gold/Silver Index has fallen by more than 30% over the past year due to poor growth in the sector.

That said, TGLDX, the First Eagle Gold Fund Class A (SGGDX), and precious metal funds, in general, have been directly affected by the poor performance of the precious metal sector. The graph above shows that TGLDX has been better managed to limit its losses compared to its benchmark. Also, TGLDX has so far performed relatively better in 2016, with a YTD (year-to-date) return of 4.2% as of February 02, 2016.

TGLDX’s holdings at a glance

John Hathaway and Doug Groh are co-portfolio managers of the Tocqueville Gold Fund from the Tocqueville Trust. TGLDX’s top equity holdings include gold-related equity securities such as Agnico-Eagle Mines (AEM), Randgold Resources (GOLD), Franco-Nevada (FNV), and Eldorado Gold (EGO), among others. The fund has a net expense ratio of 1.4%, which includes a management fee of 1%.

Now let’s do an asset allocation breakdown of TGLDX.

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