Is American Century Global Gold Investor (BGEIX) A Strong Mutual Fund Pick Right Now?

If you have been looking for Sector - Precious Metal funds, a place to start could be American Century Global Gold Investor BGEIX. BGEIX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We note that BGEIX is a Sector - Precious Metal option, and this area is loaded with different options. Sector - Precious Metal funds typically invest in companies that are involved in the mining and production of precious metals like gold, silver, platinum, and palladium. Because stocks in this environment often trade as leveraged bets of the underlying commodity--they are tied to the prices of the metal--these equities tend to be volatile.

History of Fund/Manager

American Century is based in Kansas City, MO, and is the manager of BGEIX. American Century Global Gold Investor debuted in August of 1988. Since then, BGEIX has accumulated assets of about $362.89 million, according to the most recently available information. The fund is currently managed by Yulin Long who has been in charge of the fund since May of 2016.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of -10.93%, and it sits in the middle third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 9.3%, which places it in the top third during this time-frame.

When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. Compared to the category average of 14.78%, the standard deviation of BGEIX over the past three years is 40.25%. Looking at the past 5 years, the fund's standard deviation is 38.96% compared to the category average of 37.79%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. BGEIX lost 33.92% in the most recent bear market and outperformed its peer group by 2.14%. This might suggest that the fund is a better choice than its peers during a bear market.

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. BGEIX has a 5-year beta of -0.16, which means it is likely to be less volatile than the market average. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. BGEIX's 5-year performance has produced a negative alpha of -2.11, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, BGEIX is a no load fund. It has an expense ratio of 0.67% compared to the category average of 1.38%. Looking at the fund from a cost perspective, BGEIX is actually cheaper than its peers.

Investors need to be aware that with this product, the minimum initial investment is $2,500; each subsequent investment needs to be at least $50.

Bottom Line

Overall, American Century Global Gold Investor BGEIX has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Sector - Precious Metal, make sure to go to www.zacks.com/funds/mutual-funds for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.