Schroders offers alternative to gold ETFs or equity funds
05 May 2011
News, Asia, Global
Schroders has re-named the Schroder AS Gold & Metals Fund to Schroder AS Gold and Precious Metals Fund and changed the investment approach and objective in order to offer investors an actively managed fund focused on gold and precious metal related commodity instruments, as well as the equities of those companies involved in the precious metal related industries globally.
Schroders’ commodities team, which manages US$12.5billion in commodity funds, believes that low interest rates, rising inflation, the falling US dollar, central bank buying and investor uncertainty should lead to a continuation of the bull market in gold. Gold has historically offered significant protection in these environments as well as offering portfolio diversification due to its low correlation to other asset classes.
The fund will be actively managed by Paula Bujia, a senior fund manager on the commodities team. It will invest in a range of investment instruments including futures, swaps, physically-backed exchange traded funds (ETFs) and equities. It will be measured against a benchmark comprising 75% gold spot price and 25% gold equities (NYSE Gold Bugs Index). The fund aims to be 50-100% invested in gold, but can hold 0-50% in gold equities depending on the market outlook. It can also invest up to 33% in other precious metals, such as silver and platinum, if the fund manager believes that they will outperform gold. Finally, the fund can hold up to 33% in cash in order to protect investors’ assets.
“We believe that the current investment environment should be very supportive for further increases in the gold price. The fund’s strategy also adds value against gold-backed ETFs due to diversification and the potential extra returns from investing in equities and in other precious metals. We are pleased to offer this product to enable investors to take advantage of these opportunities,” says Ms. Bujia.
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