The Junior Gold fund, which has been investing in smaller precious metals mining companies since inception in 2009, is changing its name to ‘IFSL SIM Junior Gold and Silver Miners Fund’.
The change reflects the intra group transfer of ACD from Marlborough to IFSL, the diversified investment activities of the fund, and the attractive opportunities in silver mining companies, in addition to gold miners.
Over the last 18 months the portfolio weighting in silver mining companies has increased to 40% of the fund’s value. This increased allocation is driven by growing industrial demand for the metal, underpinned by the global shift towards renewable energy, electrification of transportation, and other technological developments that favour silver’s superior electric conductivity.
Angelos Damaskos, Chief Executive Officer, Sector Investment Managers (SIM), adviser and investment manager for the fund, comments:
“To maximise the potential of investing in precious metals miners we recognised the need to broaden the scope of our investments. While gold mining shares remain the biggest proportion of our overall portfolio, we have steadily been adding holdings in silver miners.
“The current macro-economic situation, with rising inflation and historically low interest rates, is likely to result in an investor move to safe-haven assets such as gold and silver bullion. This will strengthen the appeal of all aspects of the gold and silver mining-to-market process. We invest in smaller, earlier stage operations, where we see most potential for growth, and these tend to perform better in a rising precious metals price environment, which boosts profitability.”
SIM believes gold and silver mining companies are undervalued compared to the commodity they produce and the strong cash flows generated by operating mines.
While there is some cost inflation in operations, as equipment, energy and other key prices rise, profit margins offered by historically high bullion prices remain healthy. Significant capital has also been raised by exploration and development companies to progress earlier projects, but valuations remain cheap by historical standards.
The fund was top performer for 2020 in the Morningstar Sector Equity Precious Metals category and continues to operate with the same investing principles – seeking out the companies with the strongest growth potential, whilst avoiding politically unstable territories and very early stage exploration risks.
The change of name is effective from 26 November 2021.