Precious Metal Funds Lag Behind Physical Gold Returns

The Rise of Precious Metals and Return Differences

Precious metals, especially gold and silver, have recently exhibited a noticeable upward trend. As of 2023, a significant return difference has emerged between physical gold and precious metal funds for investors. In January, physical gold provided investors with a return of 27.9%, while precious metal funds generated a slightly higher return of 22.53%.

Performance of Precious Metal Funds

According to TEFAS data, precious metal funds provided an average return of 17.5% in January, which made them the leader among all investment funds. In the current month, the highest return among 24 different precious metal funds was recorded at 34.5%. The lowest return, compared to the physical gold return of 22.52%, was still at a satisfactory level.

The Importance of Portfolio Diversification

Bulls Portfolio Gold Fund, with %13.68 precious metal share, is the fund with the highest precious metal allocation, while %8.04 of its portfolio consists of stocks, %25.76 of other investment funds, and %39.84 of exchange-traded fund participations. This diversity in precious metal funds provides investors with greater flexibility and risk management opportunities.

Featured Funds

Neo Portfolio Gold Fund holds %91.13 precious metals and its return in January reached %25.62. The second fund with the highest precious metal share is A1 Capital Portfolio Gold Fund at %88.95, providing a return of %29.06. Performance Portfolio Gold Fund, with %85.74 allocation, ranks third with a return of %25.31.

Funds with Low Precious Metal Holdings

Active Portfolio Gold Participation Fund stands out as the only fund that does not hold physical precious metals, achieving a return of %27.39 in January. %67.48 of the fund consists of public lease certificates, while %18.9 consists of foreign exchange-traded funds. İş Portfolio Gold Fund, with only %0.02 precious metal share, holds the position of having the least precious metals.

Issues with Physical Gold

The biggest issue with physical gold during this period is the gap between domestic market prices and international market prices. In the national market, the kilogram price of gold is trading at $166,500, while in international markets, this figure has fallen to $155,542. This creates a significant accessibility cost for physical gold due to the over $10,000 difference.