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Having long been considered a leading investment in the gold-related arena, Van Eck Global has a track record of managing gold investment products dating well back into the last century. The United States based firm features the Van Eck International Investors Gold Fund, which has an inception date of February 10, 1956.
Having long been considered a leading investment in the gold-related arena, Van Eck Global has a track record of managing gold investment products dating well back into the last century. The United States based firm features the Van Eck International Investors Gold Fund (MUTF:INIVX), which has an inception date of February 10, 1956, a year in which the average price of gold was $34.99 per troy ounce; few investment products share such a historic reach. The current investment team employs a flexible, bottom-up approach to identifying mining companies with attractive reserves and production levels.
Portfolio management team
Joseph Foster has been involved in managing the firm’s flagship gold fund since 1996 and is a trained geologist as well as the Fund’s portfolio manager. Prior to 1996, Mr. Foster held various senior level geology management positions over a seven year period where he was responsible for district exploration, reserve/resource delineation and modeling, and geologic input and/or strategy on mining issues. He is supported by senior analyst Charl Malan who joined the firm in 2003 as precious metals and mining analyst after holding several key positions in equity research specializing in South African mining, natural resources and financial sectors over the course of eight years.
Last year, Mr. Foster was awarded three Sauren golden awards in recognition of his demonstrated portfolio management skills outperforming over the long term. The award was based on some key quantitative metrics of the funds but additionally considered the quality and personal abilities of the fund managers. Investors may note this clearly sets this unique European rating and award apart from a host of fund ratings to be found on the market. Pushing beyond a pure quantitative analysis, the award recognizes the plausibility of the investment philosophy, the consistency in implementing it, the extent to which pragmatism plays a role, the orientation towards market indices and the process of generating investment ideas. It also considers the contribution made by a fund manager’s team or information network, his or her career-path and the degree of continuity in the performance.
Fund performance and considerations
As of February’s end, the fund has yielded some relatively strong results outperforming its benchmark NYSE Arca Gold Miners Index (GDM) over the one, three and five year periods by considerable margins in excess of 26 percent, 62 percent and 46 percent, respectively. The compounded annualized absolute return on investment for the fund is equally impressive over the one, three, five and ten year periods yielding in excess of 51 percent, 13 percent, 22 percent and 29 percent. The fund’s Management Expense Ratio (MER) is quite compelling at 1.43 percent of the funds total assets; however, as with US based Oppenheimer Gold and Special Minerals Fund (MUTF:OPGSX) it is necessary for investors to note the direct currency exposure to the American dollar. The most recent information indicates that over 55 percent of the investments are in large companies with market capitalizations of over $9 billion. The remaining exposure is distributed between 15 percent smaller companies and 30 percent mid size, with a portfolio average weighted market capitalization of around $ 6 billion.
Fund management style
According to Mr. Foster, the fund relies upon fundamental factors, rather than technical charts, for 90 percent of its decision-making. Technicals are mainly used on a trading basis to determine whether a stock might be overbought or oversold in the short term, as well as forecasting near-term gold prices.
When it buys a stock, the fund tends to hold it for the long term with a low turnover. This is especially the case with junior-mining companies, since it takes a long time to develop a gold mine. “Once we decide we like a company with its project, we’re willing to hang onto that company until they either reach production or the company gets taken out by a larger company,” Foster said.
“You don’t have to worry about it so much with larger companies that have diversified themselves with mines all around the world,” Foster said. “But when you get into the smaller stocks (companies) that only have one or two or three properties, you have to do a lot of due diligence and find out as much as you can about the properties and determine how they might perform in the future.”
Top holdings
Featuring a total of 58 positions within the fund as of last month, the top 10 positions are representative of 46 percent of the total assets under management and include:
Agnico-Eagle Mines (TSX:AEM), Silver Wheaton Corporation (TSX:SLW), Kinross (TSX:K), IAMGold Corporation (TSX:IMG), Goldcorp Inc. (TSX:G), Randgold Resources, Ltd. (NASDAQ:GOLD), Newcrest Mining Limited (ASX:NCM) (PINK:NCMGY), Barrick Gold Corp. (TSX: ABX), AngloGold Ashanti (NYSE:AU) and Pan American Silver Corp. (TSX:PAA).
