The Only Mutual Fund to Beat Gold Since the Financial Crisis

Past performance is no guide to the future. But if you don’t study history, just what will you track instead?

December 2011 marked the fifth anniversary of the end of Ownit Mortgage Solutions — a small lender in the big scheme, but “maybe the canary in the coalmine,” according to one mortgage-backed security manager back at the end of 2006.

Let’s hope he found a new career in short order. Because come March 2007, tittle-tattle claimed that distress was spreading from the subprime collapse to U.S. and Eurozone hedge funds. In July, news leaked and then broke of the collapse of two hedge funds at Bear Stearns, and the permanent emergency had begun.

What fun lay ahead! With the gold price at just $650 per ounce, too! Silver was knocking around $13 per ounce. Together, that’s made for quite the track record since.

 

The Top U.S. Fund Managers: Annualized Returns

	Silver (1)	Gold	No. of Funds Beating Top Precious (2)	Top U.S. Mutual (3)	Top Fund’s Return	Avg. Fund Return
10 years	20.08%	19.00%	11	USAGX	27.01%	0.63%
5 years	16.92%	20.03%	1	OSFDX	40.68%	0.63%
3 years	37.54%	21.88%	7	OSFDX	67.57%	11.64%
1 year	-8%	11.65%	195	GVPIX	44.31%	-1.99%
(1) Precious metals prices from the LBMA, periods ending 12/30/2011
(2) Fund count by BullionVault, using Lipper data via WSJ Online
(3) Single-best fund, best return & average return of all mutual funds taken from Morningstar

USAA Precious Metals & Minerals (MUTF:USAGX) you probably know. Co-manager Mark Johnson stepped down last month, leaving Dan Denbow to continue running the single-best performing U.S. mutual of the past 10 years. Other big precious-metal miner funds pack the list of 11 mutuals to outperform silver and gold.

ProFunds US Government Plus (MUTF:GVPIX) you might expect to know too, what with it delivering 44% returns in calendar-year 2011. GVPIX led a bunch of long Treasury-bond portfolios. The old Lehman’s TLT tracker returned 34% — who needed active management, let alone risk, last year?

But the standout fund over both the past three and past five years? The only mutual to beat gold for U.S. investors since the eve of this crisis is Oceanstone (MUTF:OSFDX). Don’t feel cheated if you’ve never heard of it. Apparently it has less than $15 million in assets, even though the minimum investment is $3,000. Its stellar five- and three-year records include a ridiculous 264% made in 2009, just from doing what it does — seeking value in common stocks on the NYSE.

Yes, it can be done. And yes, it could be done again, too. U.S. investors really could beat gold since the alarm bells rang out at the turn of 2007. Because out of the 7,500 separate funds available — with 22,000 shares classes to choose from — one fund managed it. Just like seven funds (go on, count ‘em) managed to beat silver since the turn of 2009, and fully 11 separate U.S. mutual funds managed to beat silver since the start of 2002.

Adrian Ash is head of research at BullionVault.