How to Compare Gold Funds
All gold funds are not created equal. Some hold strictly gold, while other gold funds hold various gold mining stocks, gold stocks, foreign gold stocks, bonds, and gold bars, and often other metals including silver, copper, platinum, palladium and zinc. Investors looking to buy a pure gold fund instead of precious-metal funds, which hold a more varied mix of stocks and investments, should look closely at the fund's holdings.
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Significance
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Thanks to financial websites, including Yahoo Finance and Google Finance, a plethora of information is available to help investors make informed and educated choices when selecting gold funds. Also, mutual fund home pages provide detailed fund information and performance reviews. Funds can be researched by name, industry, and performance. Fund information available under a company's profile includes such information as holdings, returns, dividend payments and schedules, and often ratings. Look closely at the funds' holdings, compare how they have performed over the years, and review dividends and short-term and long-term distributions.
Considerations
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In addition to gold and/or precious metal mutual funds, many investors choose to invest in gold exchange-traded funds, or ETFs. These funds trade like stocks and can be quite volatile. The most popular are SPDR Gold Trust (ticker: GLD) and iShares COMEX Gold Trust iShare (IAU), which are more purely gold plays.
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Benefits
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Gold funds are volatile and can be risky. They have rewarded many investors with profitable long-term gains over the years. For example, the Van Eck International Investors Gold Fund A has a five-year annualized return of 26.49 percent, and the USAA Gold Precious Metals and Minerals Fund returned 28.18 percent. For those willing to take on some risk, gold funds can add some glitter.
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