Investors remain keen on gold, if manager Evy Hambro's BlackRock Gold & General Fund is anything to go by. In the past 24 months, the fund has swelled by £1.5bn to £3.4bn. Small wonder. The fund has delivered a five-year cumulative return of 111.6%, compared to the FTSE Gold Mines sector return of 88.8%.
Last year was tougher for the fund, which returned 2.4%, compared to 5.4% for the wider sector. The issue last year wasn't so much gold as gold equities, Hambro tells The Daily Telegraph. Gold stocks fell by 16% compared to an 11% rise in the metal price.
However, Hambro points out, this offers a good opportunity. Strong recent earnings in gold mining and high free-cash levels could see equities catching up with gold. "They were at the bottom in terms of relative performance in October last year, but they have been outperforming bullion since We're seeing companies raising dividends which is a key catalyst, and investors' risk appetite is returning."
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Hambro's fund has nearly 75% of its portfolio invested in gold mining and production (Newcrest Mining, Fresnillo, Goldcorp and Randgold Resources each account for over 5%).
The long-term fundamentals in the gold market look positive, with negative real interest rates set to persist in most major economies, and central banks upping their purchase of bullion (440 tons in 2011 compared to 77 tons in 2010). The year ahead will hold many twists and turns, and gold "appears attractive as a hedge against many of these potential pot holes", says Hambro. As long as the fundamentals remain strong, "I would buy gold at almost any price".
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BlackRock Gold & General Fund top ten holdings
| Newcrest Mining | 8.2 |
| Fresnillo | 6.3 |
| Goldcorp | 6.0 |
| Randgold Resources | 5.3 |
| Barrick Gold | 4.6 |
| Kinross Gold | 4.2 |
| Minas Buenaventura | 4.0 |
| INDS Penoles | 3.7 |
| Newmont Mining | 3.6 |
| Franco Nevada | 3.4 |
