"Precious metal stocks tend to do best in moments of uncertainty, of which there are many at the moment. Added kickers for these stocks will be when inflation is higher than expected and reflationary juices start flowing."
But he warns: "These are very choppy investments which tend to over-react, in both directions, to newsflow. As such, we tend to be pretty active in how we trade them."
Editor's Pick
BlackRock Gold & General
Veteran investor Evy Hambro manages this £1.1bn fund and was joined in July 2015 by Tom Holl. The fund invests in shares of companies which derive a significant proportion of their income from the mining of gold or other precious metals. Among its top 10 holdings are Newcrest Mining and Silver Wheaton. FE Analytics shows that the fund is down 14.3 per cent over the five years to June 2 2017, but its benchmark, the FTSE Gold Mines index, has fallen 34.2 per cent over the same period. Performance has since picked up and the fund is up 44.4 per cent over three years to June 2, broadly in line with the index's 45.6 per cent gain.
Fund Picks
HC Charteris Gold & Precious Metals
Launched in February 2010, this £16m fund is managed by Ian Williams. The majority of the fund is invested directly in blue-chip gold and precious metal mining companies. Some 25 per cent will be allocated to mid-cap/smaller gold mining companies, while 10 per cent of the fund can be held in exchange-traded products. At the end of March, the portfolio had 34 per cent allocated to gold and 64 per cent in silver. Over the three years to June 2 the fund has generated a 27.1 per cent return.
Ruffer Gold
This £683m fund suffered more than most during gold's disastrous 2013, falling 61 per cent that year. But under manager Paul Kennedy, who took over the portfolio at the start of 2015, it has started to outperform. Over the three years to June 2 it has returned 66 per cent, outperforming most peers. The portfolio invests in precious metal miners across the globe, with 33 per cent of holdings having a market capitalisation of less than $1bn (£776m).
