Sentry Precious Metals Growth Fund

Analysis: Before you invest in the Sentry Precious Metals Growth Fund, you should be required to take a physical to test your body’s reaction to stress, because this is easily one of the most volatile funds in the country. It has a monthly standard deviation that is more than twice the volatility of the broader equity markets and is the highest in the precious metals category.

Despite this volatility, investors have been rewarded with strong returns, with the fund gaining nearly 33% in the three months ending October 31. It also has a ten year annualized compound return of 19.2%, well above the category average and the returns posted by the broader equity markets.

To achieve these staggering numbers, it invests in companies that are active in the precious metals sector with a focus on small and mid cap companies. It is extremely concentrated, holding 51 names with the top 10 making up nearly 70% of the fund. In fact, four names, Allied Nevada Gold Corp, AuRico Gold, Semafo, and Rio Alto Mining made up 43% of the portfolio on their own. Understandably, the fate of the portfolio rests with the performance of these names.

The investment process is fairly patient, as the fund has experienced modest levels of portfolio turnover, averaging about 40% per year. The cost of the fund is on the high side, with an MER of 2.78%, which is well above the category average.

There is no doubt that this fund has performed extremely well over the long term. Given the concentration levels and overall risk profile, we aren’t comfortable recommending it to most investors. Instead, we would suggest the RBC Global Precious Metals Fund which is significantly less concentrated and a less volatile option than this offering. For those with extremely high risk tolerances, this is a fund that you may want to own, based on the track record of the manager. As with any volatile, sector specific fund, exposure within the portfolio should be limited to the amount you are willing to lose.