The manager invests worldwide mainly in stocks issued by companies engaged primarily in the extraction, processsing and marketing of gold. In companies engaged in extracting, processing or marketing other precious metals respectively precious stones or non-ferrous metals, the fund may invest up to 25% of its assets. The net earnings of the investment fund are distributed in February of each year.
The managers’ investment philosophy is contrarian and value oriented with a bottom-up approach. However, due to the specialized nature of the Gold Equity strategy, the investment team is aware of macroeconomic trends in order to monitor the investment case for gold.
The major source of value added stems from the investment team’s research capabilities and deep fundamental knowledge of the precious metals sector. The team focuses on a range of companies from their very early stages of evolution to full maturity but tends to invest in smaller to mid-cap companies that are beneath the “radar screens” of other investment managers. Smaller companies tend to be more attractive to the team as they represent a greater scale of upside return should these companies uncover meaningful resources. In addition, the breadth and depth of the investment team’s understanding of geology allows them to seek unique opportunities that may otherwise be unnoticed by the market. The group’s primary efforts are focused on identifying potential value that the market may not recognize or which the market excessively discounts because of a lack of available information.
The investable universe is comprised of gold and precious metals mining shares and bullion. The investment team typically invests in common stocks with initial holdings of 1% or less. Mature holdings ideally range between 2% and 6%. Position weights are not targeted on a mechanistic basis and position size is a result of the evolution of the specific company, fundamental developments, and analyst’s research findings. The approach taken to building or reducing position size is generally gradual.
The manager has a bottom-up approach to conducting research. Company specific opinions are based on fundamental research and regular dialogue with company management. Traditionally, the best investment ideas have initiated from internal research, which is formed through the analysis of company reports, management meetings, on-site visits, and internal discussion.
Securities may be sold if position limits are exceeded, points of over valuation are consistently exceeded, or as a result of fundamental disappointment.