Stock ideas are then generated through a company screen, looking for those businesses earning a high return on capital with strong cash generation trading on a reasonable valuation.
Once an idea is identified, the team will undertake a full income statement, cashflow statement and balance sheet analysis.
A third of the fund can be invested in other metals, such as platinum, palladium, nickel or silver.
The final portfolio consists of around 25 holdings, around two-thirds of which are large-caps. In the past five years, the fund has returned an astounding 212.7 per cent to investors with an ongoing charge of 0.84 per cent.
The fund has a strong process emphasising the importance of high returns on capital – something which is supported by excellent returns. We also like the emphasis on sustainability built into all company models.
Naturally there will be volatility with commodities - but for those who want exposure to the precious metal via mining equities this truly is an excellent option.
Darius McDermott is managing director of FundCalibre