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In recent years, gold mining stocks have not yielded much on balance, but some investment funds have still managed to achieve success. A small investment fund from the Netherlands leaves the competition far behind by investing in new and small gold mines. Plethora Precious Metals, a fund that manages only €18 million in assets, was recently interviewed by Bloomberg.
With a return of more than 500% over the past six years, Plethora Precious Metals leaves big names like Blackrock and Vanguard far behind. The fund also performs much better than the GDXJ, an index of several young mining companies. This year, the fund is at a small loss, but over the longer term, it is still doing much better than the market. What is the success formula of this investment fund?
Plethora Precious Metals manages assets of €18 million, making it a very small player in the gold sector. Yet that is precisely the strength of the investment fund, as founder Peter Vermeulen notes in the interview with Bloomberg.
"We invest in small teams of geologists who search for underground gold reserves. These companies are so small that it is practically impossible to invest a lot of money in them. However, the return when they find gold is huge."
The fund has about twenty different companies in its portfolio, which have a market value of $20 million or less. They are small mining companies, which ignore the large investment funds with billions under management. It is not interesting for these funds to keep a lot of small positions.
In its early years, Plethora Precious Metals used the same investment strategy as the larger investment funds in the gold mining sector. When it decided to set its own course in 2014, it managed to beat the index and leave competitors behind. In a statement to Bloomberg, fund manager Douwe van Hees said:
"We can allocate money very specifically and don't have to invest in a limited number of underperforming stocks. In the past, we invested in large companies that had already found gold. We tried to beat the index, but it didn't turn out to be a great success. That's why we decided to change our strategy."
Due to the success of recent years, many investors want to put money into the fund, but the fund managers of Plethora Precious Metals are very reluctant to do so. Since 2016, the fund has not taken on any assets. Participants recently even got €1 million back, the second time in two years.
Plethora Precious Metals has now come up with a different strategy to be able to grow further. Instead of raising more money for the existing fund, there is now a new Private equity fund. This fund will invest in early-stage exploration funds managed by geologists. Under the name Plethora Private Equity this fund will follow the same investment strategy as the Plethora Precious Metals fund that has been in existence since 2012.
The new Plethora Private Equity aims for double-digit annual returns and will return half of the profits realized to investors.
In the coming months, registration for the fund (from €100,000) will be open to a limited number of investors. Are you interested in participating or would you like more information? Click here (opens a new window)
Disclaimer:
The value of the investment may fluctuate. The participant may lose money on this investment. Past performance is no guarantee of future performance. Please refer to the Provider's Essential Information Document and Information Memorandum for the full disclaimer: https://plethora-pe.com/fund-documents/
Holland Gold receives compensation from the provider.
