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Gold the winner in S&P Q1 sector funds survey

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Gold emerged as the clear winner among 16 global fund sectors monitored by S&P Fund Services, with an 11.1 per cent return on the median fund during the first quarter of 2009.

Gold emerged as the clear winner among 16 global fund sectors monitored by S&P Fund Services, with an 11.1 per cent return on the median fund during the first quarter of 2009.

‘Gold was boosted by its status as a safe haven and as a hedge against the inflation thought likely to result from central banks’ quantitative easing measures,’ says S&P Fund Services lead analyst Alison Cratchley.

The only other sector to record a positive return (1.2 per cent) was global technology, seen as benefiting from strong balance sheets and attractive valuations.

The worst performance came from global property (-20.4 per cent) and finance (-19.8 per cent), both adversely affected by the global credit crunch.

Apart from these two, returns ranged from -0.6 per cent for global TMT to -16.5 per cent for utilities.

Even after gold’s first quarter outperformance, fund managers remain bullish on the outlook for the metal.

Daniel Sacks of the S&P A rated Investec Global Gold Fund sees the gold price breaking through its 2008 high of USD1,030 per ounce. He thinks gold shares still offer significant upside given a high and still rising gold price, falling operating costs and attractive valuations relative to both the gold price and historic levels.

A similar view is taken by Evy Hambro at the S&P AAA rated BlackRock Global Funds World Gold Fund. He believes that the gold price will need to exceed USD1,000 per ounce for a prolonged period in order to bring the supply/demand equation back into balance.

In the only other outperforming sector, global technology, fund managers are also positive. Telis Bertsekas, manager of the S&P AA rated MFS Meridian Technology Fund, believes that the sector is attractive relative to others given market worries over corporate leverage. Tech companies usually have solid balance sheets with low levels of debt and high cash positions. They also have limited exposure to regulatory risk – a concern in some other sectors – and little exposure to unfunded pension liabilities.

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