Franklin Gold and Precious Metals
YTD Return: -28%
2012 isn’t an isolated incident, either. The Franklin Gold and Precious Metals Fund (MUTF:FRGOX), which has $2.3 billion in assets, actually had a bad 2011 as well, shedding more than 25% for the year.
This points to a big issue with gold funds: There can be little correlation between the price of gold and the miners. This fact was exaggerated even more in the returns of the Franklin fund.
While FRGOX does have large holdings in big mining names like Goldcorp (NYSE:GG) Randgold Resources (NASDAQ:GOLD), it also tends to invest in smaller operators — and unfortunately, these types of companies do not have the scale to manage the escalating costs of mining or the resources to pull off acquisitions, which help to boost reserves. With little protection, FRGOX is on the decline once more.