Test Case: Leveraging on Market News to Invest into Gold Unit Trust Fund

Update (5 June 2022)

Fund: RHB Gold and General Fund

Period of Investment: 26 July 2019 - 3 June 2022 (1043 days)

Return of Investment: +42.90%

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Positive Gold Miner's Earning Ahead

I came across an article from MarketRealist which talked about Gold Miners's earning season for Q2 is scheduled to start this Thursday (25 July 2019).

According to the report, Gold Mining companies including Newmont Goldcorp (NEM), Agnico Eagle Mines (AEM), and Yamana Gold (AUY) are expected to release their earnings this coming Thursday. The report also include analyst's recommendation on which mining stocks should investors buy based on the expected earnings. 

Standout Gold Mining companies that are expected to see their stock prices benefit from the earnings are AEM and NEM (please remember both names as they will surface again later)

Gold Price has been Bullish

For investors who track gold closely, you would have notice that gold price’s reversal this year has created opportunities in gold stocks. The SPDR Gold Shares ETF (GLD) had gained 11% year-to-date as of Friday. About 11.3% of those gains have come in the last one-and-a-half months. Since the end of May, the S&P 500 and the Dow Jones Industrial Average have returned 6.1% and 7.1%, respectively.

Bullish Gold Price + Positive Earnings = Opportunity!

Now this comes back to this blog post, where we are going test the theory of trying to time the entry of investment based on potential uptick of miner's stock price as well as leveraging on the current bullish trend of gold price.

How to go about this?
Step 1: Identify the right Gold fund to invest into
There are only two Gold based unit trust funds available for Malaysian to invest into (both are available on eUnittrust platform). The two funds are:

• RHB Gold and General Fund (Conventional)
• Precious Metals Securities Fund (Islamic)

Step 2: Check portfolio composition of these two funds

Top 5 Holdings of RHB Gold and General Fund consist of Agnico Eagle Mines Ltd (AEM) and Newmont Goldcorp (NEM) which make up 16.48% of the total portfolio. Both which are identified to be attractive BUY by gold analysts.

31st May 2019: RHB Gold and General Fund Fund Factsheet

Similarly the Top 5 Holdings of Precious Metals Securities Fund also consist of Agnico Eagle Mines Ltd (AEM) and Newmont Goldcorp (NEM) which make up 17.52% of the total portfolio.

31st May 2019: Precious Metals Securities Fund Factsheet

Considering that both unit trust funds have exposure to other mining companies apart from AEM and NEM, investors may also enjoy overall increase in these fund returns if gold prices continues to rise over the next couple of months.

Step 3: Invest now

Since this is a test case, I have invested RM1000 into RHB Gold and General Fund via eUnittrust. Coincidentally, there is an ongoing 0% sales charge promotion over at eUnittrust, thereby allowing me to save on the sales charge and allowing me to profit immediately on any uptick of the fund price.

RM1000 investment to validate if this Test Case works!

Details of Investment:

• Fund Name: RHB Gold and General Fund
• Amount Invested : RM1000
• Indicative Price of Fund: RM 0.3547/unit
• Sales Charge : 0%

Step 4: Now we wait!

Now the fun part starts as I will track the price of the Stock Mining companies that are listed in both funds. Let's see if we are able to make a small profit from this test case!

Cheers and I will be posting a follow up blog post on this somewhere next week. In the meantime, do follow me at Invest Made Easy Facebook for updates and news.