Mackenzie Universal Precious Metals Fund

Analysis: Many believe that with all the liquidity that central banks have pumped into the economic system, the outlook for precious metals, and gold in particular remains quite strong. Precious metals funds are a good way for investors to access this sector.

One such fund is the Mackenzie Universal Precious Metals Fund which can invest in a wide range of companies involved in the precious metals sector including the junior, early stage exploration companies to the very senior production companies. The focus is in Canada, but can invest up to 49% in global equities. In evaluating companies, a couple of the traits they look for include a low cost structure and a very sound balance sheet.

Looking at the current environment, management sees significant support for gold and believes that the opportunity cost for holding it is quite low at the moment. It is their opinion that quality gold companies should match the performance of gold bullion going forward. They are looking for companies that can add incremental value over and above the basic appreciation in the price of gold. One particular area where they are finding such opportunities is in the precious metals royalty companies which they believe are well positioned for a new growth cycle as they offer alternative funding sources to mining companies.

While the investment strategy seems sound, performance has been largely disappointing. The fund has failed to keep up with the category, particularly in 2008 and 2010 when it lagged the category by a wide margin.

Quite frankly, we believe that there are better options available in the precious metals category including Sentry Precious Metals Growth and RBC Global Precious Metals.