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Gold equity funds outperform rising gold price

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Gold mining funds got a ray of sunshine last month although a single boost to returns is too fleeting to call a turnaround just yet, Hargreaves Lansdown says.

In January seven of the top 10 performing funds on the firm’s platform were gold equity funds.

The top performer was £6.5m Junior Gold with a 21.88 per cent monthly rise, followed by £3.6m WAY Charteris Gold posting 15.11 per cent and £1bn BlackRock Gold & General with 10.04 per cent.

Hargreaves Lansdown head of VCT research Richard Troue says the prevalence of gold funds is due to tightening fiscal discipline among natural resources companies.

That has pushed their values higher despite the gold price remaining depressed.

“Shares in gold mining companies have staged a mini-resurgence following a torrid 2013 where the gold price and earnings fell as investor sentiment towards the sector was highly negative,” Troue explains. 

“It is too early to call a turnaround in the fortunes of these companies, but many have worked hard to reduce costs and changes in management at the top level have seen a greater focus on shareholder returns,” he says.

“In January we saw gold mining companies recovering faster than the gold price. If companies can start to deliver earnings growth in 2014 and 2015 the share price recovery could continue.”

Top performing funds in January 2014

1Junior GoldSpecialist21.88%
2WAY Charteris Gold PortfolioSpecialist15.11%
3BlackRock Gold & GeneralSpecialist10.04%
4Old Mutual Blackrock Gold & GeneralSpecialist10.01%
5Investec Global GoldSpecialist9.76%
6Smith & Williamson Global Gold & ResourcesSpecialist8.83%
7AXA Framlington BiotechSpecialist8.51%
8CF Ruffer Baker Steel GoldSpecialist8.25%
9Jupiter WillacreUnclassified7.79%
10MFM Techinvest Special SituationsUK Smaller Companies7.66%
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