Gold funds bounce as spot price edges into bull market

The price of gold has edged into bull market territory today with a gain of roughly 20 per cent since its intra-day low on June 28, boosting funds investing primarily in gold miners after months of losses.

Sector Investment Managers’ £6.9m MFM Junior Gold fund - run by Angelos Damaskos - led the pack with a return of 28.3 per cent between June 28 and August 23, according to FE Analytics.

Evy Hambro’s £1.4bn BlackRock Gold & General fund has gained 25.8 per cent in the same period, while the Smith & Williamson Global Gold & Resources fund has risen 26.3 per cent.

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But the short-term returns failed to mask the torrid performance record of the funds in the past three years. Both the BlackRock and Smith & Williamson funds lost roughly 35 per cent in the three years to August 23, while the MFM Junior Gold fund - which invests primarily in small cap miners - has fallen 62.9 per cent.

The recent rise in the gold price has been helped in part by the weakness of the rupee, with the Indian currency’s decline increasing the attractiveness of gold for the country’s investors as a store of value. India is one of the largest importers of gold.