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Vanguard Precious Metals and Mining Fund to change name (and possibly more?)
Currently the top 10 holdings all appear to be miners and make up over 40% of the fund’s investments. The fund lags most other mining funds for 1 & 5 years. Admittedly, mining hasn’t been a great place to be over that time. The 0.36% ER is low. But, for whatever reason, resource funds generally have lower ERs than might be expected.
Couldn’t tell from the blurb exactly what they intend to change besides the name. Would guess they’ll move more to an infrastructure approach while retaining a sizable exposure to the miners. With a mandate like “infrastructure” the door is pretty much wide open to a variety of investments. Price used to include financials in their old infrastructure fund. The idea was that if a company loaned money to infrastructure companies or projects it belonged in an infrastructure fund. (TRP closed the fund in 2014, merging it into their Real Assets fund, PRAFX.)
The fund's already gone through minor (no pun intended) tweaks. I believe it started out as Gold and Precious Metals. From its 1994 prospectus:
The Gold & Precious Metals Portfolio invests in the equity securities of foreign and domestic companies engaged in the exploration, mining, fabrication, processing, or marketing and distribution of gold, silver, platinum, diamonds or other precious and rare metals and minerals. The Portfolio may also invest up to 20% of its assets directly in gold, silver or other precious metal bullion and coins.
Apparently at or near the same time, it dropped the "Gold" from its name, becoming simply Precious Metals,. The next change came May 24, 2004. Mining was added to the name, and mining stocks played a bigger role in the portfolio:
FUND TO REOPEN WITH BROADER INVESTMENT MANDATE AND NEW NAME Effective on or about May 24, 2004, Vanguard Precious Metals Fund will reopen to investors with a broader investment mandate and a new name.
The board of trustees has decided to expand the fund's investment mandate. On the effective date of this change, the fund will invest at least 80% of its assets in the stocks of foreign and U.S. companies principally engaged in the exploration, mining, development, fabrication, processing, marketing, or distribution of (or other activities related to) metals or minerals. The majority of these companies will be principally engaged in activities related to gold, silver, platinum, diamonds, or other precious and rare metals or minerals. The remaining companies will be principally engaged in activities related to nickel, copper, zinc, or other base and common metals or minerals.
The board of trustees acted in response to the increasing concentration of the metals and minerals industries, a trend that limited the options available to the fund's investment advisor. The decline in the number of precious metals issues on the market, combined with the advisor's stringent quality criteria, made it difficult to keep the portfolio fully invested while maintaining the overall quality and diversity of its holdings. The trustees therefore decided to broaden the range of stocks in which the fund can invest while adhering to its traditional investment strategies.
I have no idea what Vanguard is trying to do with this latest change. Investing in companies/industries with declining CAPEX sounds like investing in cash cows. That's an income play, the opposite of what I'd expect from a fund that will continue to keep over 25% in precious metals and mining.
Comments
Currently the top 10 holdings all appear to be miners and make up over 40% of the fund’s investments. The fund lags most other mining funds for 1 & 5 years. Admittedly, mining hasn’t been a great place to be over that time. The 0.36% ER is low. But, for whatever reason, resource funds generally have lower ERs than might be expected.
Couldn’t tell from the blurb exactly what they intend to change besides the name. Would guess they’ll move more to an infrastructure approach while retaining a sizable exposure to the miners. With a mandate like “infrastructure” the door is pretty much wide open to a variety of investments. Price used to include financials in their old infrastructure fund. The idea was that if a company loaned money to infrastructure companies or projects it belonged in an infrastructure fund. (TRP closed the fund in 2014, merging it into their Real Assets fund, PRAFX.)
In May 2001, it changed from a diversified fund to a nondiversified fund:
https://www.sec.gov/Archives/edgar/data/734383/000093247101500144/precmetals523.txt
Apparently at or near the same time, it dropped the "Gold" from its name, becoming simply Precious Metals,. The next change came May 24, 2004. Mining was added to the name, and mining stocks played a bigger role in the portfolio:https://www.sec.gov/Archives/edgar/data/734383/000093247104000482/precious032004.txt
I have no idea what Vanguard is trying to do with this latest change. Investing in companies/industries with declining CAPEX sounds like investing in cash cows. That's an income play, the opposite of what I'd expect from a fund that will continue to keep over 25% in precious metals and mining.
I'm confused.
Found this link over at Bogleheads (credit the poster):
https://investor.vanguard.com/mutual-funds/precious-metals-changes?cmpgn=EM:RIG:ED:Stargaze:JulEmail:Email:0718:0101:FNA:MUF:0323
!@#$%^&*