Usually reliable during market downturns, not all gold funds have been able to generate a positive return during COVID-19, although it still outperforms other commodities.
According to FE Analytics, Perth Mint Gold (20.35%) and BetaShares Gold Bullion exchange traded fund (ETF) (3.98%) were the only funds in the Australian Core Strategies (ACS) commodities and energy sector that reported a positive return.
Select Baker Steel Gold (-7.27%), VanEck Vectors Gold Miners ETF (-8.31%) and BetaShares Agriculture ETF (-9.74%) reported the smallest losses, and the average sector return was -16.56%.
Perth Mint Gold was issued by Gold Corporation, which traded as The Perth Mint, a statutory authority of the Western Australia government and its liabilities were guaranteed under the Gold Corporation Act 1987.
The holdings were supported by government-backed gold which was safeguarded in The Perth Mint’s central bank grade vaults.
The BetaShares gold ETF aimed to track the performance of gold bullion with a currency hedge against movements in the exchange rate with the US dollar.
Best-performing ACS commodities and energy sector funds over the three months to 31 March.
The worst-hit funds in the sector were BetaShares Crude Oil Index ETF (AUD Hedged) (-67.39%), BetaShares Global Energy Companies ETF Currency Hedged (-43.17%), VanEck Australian Resources ETF (-28.15%), SSgA SPDR S&P ASX 200 Resources (-27.79%) and BetaShares Commodities Basket ETF (AUD Hedged) (-27.52%).
COVID-19 was a factor for oil in Q1, as Russia having walked from an agreement with the Organization of the Petroleum Exporting Countries (OPEC), and Saudi Arabia oversupplying the market.
The Q1 performance of oil-focused funds did not take into consideration news of oil prices turning negative for the first time in history this week.
The BetaShares Crude Oil Index ETF, for example, lost another 46.95% from 31 March, 2020, to 23 April, 2020.
Tal Lomnitzer, senior investment manager on the global natural resources team at Janus Henderson Investors, said oil supply and demand fundamentals were currently challenged by too much supply.
“OPEC’s return to supply discipline is not sufficient to balance a market suffering a collapse in demand due to the COVID-19 pandemic and associated lockdowns, economic contraction and travel disruption,” Lomnitzer said.
“These fundamentals are the reason that crude for May delivery started the week at the already beaten down price of $18 per barrel.”
Worst-performing ACS commodities and energy sector funds over the three months to 31 March.
