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April 17, 2013, 7:34 p.m. EDT

Is there gold in your 401(k)?

5 mutual funds hammered by the yellow metal

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By Ian Salisbury

AFP/Getty Images

It’s not just gold bugs getting hit by the yellow metal’s sharp decline.

Stocks of gold mining companies received a lot of attention from investors over the past several years, with high gold prices flowing directly to their bottom lines. Of course, with gold now near two-year lows — the metal posted its largest single-day drop in 30 years on Monday before recovering somewhat today — these stocks have more recently been taking it on the chin.

The $5.7 billion Market Vectors Gold Miner’s ETF /zigman2/quotes/206399889/composite GDX +0.69%   declined 9.9% Monday and is down 38% for the year. Of course, investors that dabble in such narrowly focused funds know (we hope) they are in for big price swings.

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Gold's fair value is $800 an ounce

Mark Hulbert advises investors not to expect gold prices to pop back anytime soon. He points out gold's fair-market value may be no more than $800 an ounce.

But some mutual funds with much broader investment mandates are also big holders of gold-mining stocks. These have been stung too, with tumbling gold prices in some cases appearing to offset much or all of the gains investors might have realized from the stock market’s roughly 10% rally this year. “It cost us,” says Bill Nasgovitz, portfolio manager of the $1.2 billion Heartland Value fund, whose fund owns producers like Golden Star Resources and AuRico Gold. He’s sticking with the sector. “It’s a volatile world,” he says.

Heartland Value has lagged the market this year, returning just 0.7%. The fund’s long-term track record remains strong, however. Over the past decade, it’s beaten the broader market handily.

Here are five prominent mutual funds that had significant holdings in gold-mining stocks when they last reported their portfolios to fund researcher Morningstar. (Managers may have bought or sold since. Gold stocks’ declining values also mean they’re likely to be a smaller part of managers’ overall portfolios today than they were on the report date.)

Hussman Strategic Total Return  

  • Fund assets: $1.6 billion

  • Gold stock exposure: 15% (as of Dec. 31)

  • Year-to-date return: -5.3%

Wells Fargo Advantage Small Cap Value  

  • Assets: $3.6 billion

  • Gold stock exposure: 10.7% (as of Feb. 28)

  • Year-to-date return: 1.3%

Nuveen Tradewinds Value Opportunity  

  • Assets: $608 million

  • Gold stock exposure: 8.6% (as of Feb. 28)

  • Year-to-date return: 3.7%

Heartland Value  

  • Assets: $1.2 billion

  • Gold stock exposure: 7.4% (as of Dec. 31)

  • Year-to-date return: 0.7%

First Eagle Global  

  • Assets: $41 billion

  • Gold stock exposure: 2.7% (as of Jan. 31)*

  • Year-to-date return: 4%

* In addition to gold stocks, First Eagle Global also held gold bullion amounting to another 4.5% of its portfolio.

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