Gold rush or bull market
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From working in a mine, to being a portfolio manager who produced the best fund manager return in the industry, David Baker shares the secrets to his success.
Select Baker Steel gold held about 80 per cent in gold equities and produced 115.70 per cent year to date, which ranked it as the as the best overall performer on Money Management's Investment Centre (MMIC).
The fund was managed by Baker Steel Capital Managers' Sydney-based managing partner, David Baker, who said the firm picked companies that had strong fundamentals and very strong management teams, and they often visited the mines they invested in too.
Baker started working in mines after university as a metalist. and had been in the gold industry for over 30 years. That helped him understand the ins and outs of the very volatile gold equity sector, he said.
"Gold is a good diversifier in any portfolio and particularly today when central banks around the world are trying to de-value money. Gold is basically a real anchor in that type of environment," Baker said.
Just last week, another fund manager, BetaShares said that gold was set to be a major beneficiary of monetary easing.
Gold was in a major bull market and was only about four months into to its three to four year run, he said.
In that time the gold price climbed about 28 per cent, and it could go 90 per cent higher, based on how previous bull markets acted, he said.
Notwithstanding that, they picked "some fantastic companies. And a couple that had done remarkable well were St Barbara and Resolute. Both are Australian," he said.
"Basically we've been buying the best companies in the sector at the best price," he said.
For example, they bought in on St Barbara at 12 cents it and now it's trading around $3.60.
"St Barbara turned around its operations and it's now generating something like $250 to $300 million of cash, whereas 12 to 18 months ago it was capitalised at $50 million," he said.
Despite outperforming the index over one, three and five years, Financial Express only awarded the fund one out of five crowns, based on its rating system.
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