Sprott Gold & Precious Minerals Fund
Investment Team
Charles Oliver
Senior Portfolio ManagerCharles Oliver
Senior Portfolio Manager
Charles Oliver joined Sprott Asset Management LP in January 2008. With over 25 years of financial industry experience, he is now Lead Portfolio Manager of the Sprott Gold & Precious Minerals Fund, Sprott All Cap Fund, and co-manages Sprott Silver Equities Class.
Prior to joining Sprott, Charles was at AGF Management Limited, where he led the team that was awarded the Canadian Investment Awards Best Precious Metals Fund in 2004, 2006, 2007, and was a finalist for the best Canadian Small Cap fund in 2007. His accolades also include: Lipper Awards’ best 5-year return in the Precious Metals category (AGF Precious Metals Fund, 2007) and best 10-year return in the Natural Resources category (AGF Canadian Resources Fund, 2007).
Charles began his investment career with Midland Doherty in 1987, and in 1999, joined AGF’s Fund Management department. He went on to become Co-Manager of the AGF Precious Metals Fund, the AGF Global Resources Fund, AGF Canadian Resources Fund and the AGF Growth Equity Fund; Manager of the AGF Canadian Small Cap Fund; and Co-Advisor on the Markland Oilsands Sector Fund. Charles also helped manage institutional funds and funds domiciled in Japan, Ireland, and the UK.
Charles combines a big picture approach with a bottom-up process, and focuses on strong management teams with sound strategy. He looks for growth at a reasonable price (GARP) and generally buys companies with the view of holding them over the long-term.
Charles obtained his Honours Bachelor of Science degree in Geology from the University of Western Ontario in 1987, and obtained his CFA designation in 1998.
Fund Details
| Fund Status | Open |
| Distributions | Income and Capital Gains Distributed Annually (if any) Distributions are reinvested automatically |
| Fund Code |
SPR 003 - (A) |
| Inception Date | 11/15/2001 |
| Nature of Securities | Mutual Fund Trust Units |
| Type of Fund | Gold and Precious Minerals Fund |
| Valuations | Daily |
| Redemptions | Daily |
| Minimum Initial Investment | $1,000 CDN |
| Minimum Subsequent Investment | $100 CDN |
| Minimum Investment Term | 90 days (2% penalty) |
| Management Fee | 2.5% annual - (A) 1.5% annual - (F) |
| Performance Fee | 10% of Excess Over the S&P/TSX Global Gold Total Return Index |
| Eligible for Registered Plans | Yes |
| Investor Risk Tolerance | High |
Fund Objective
The primary objective of this Fund is to provide long-term capital growth. In order to achieve its investment objective, the Fund invests primarily in gold, gold certificates, precious metals and minerals, the certificates relating to such metals and minerals and/or in equity securities of companies that are directly or indirectly involved in the exploration, mining, production or distribution of gold and precious metals and minerals.The indicated rates of return for series A/class A securities of the Funds are based on the historical annual compounded total returns including changes in unit/share value and reinvestment of all distributions or dividends and does not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. Investment funds are not guaranteed, their values change frequently and past performance may not be repeated. This communication does not constitute an offer to sell or solicitation to purchase securities of the Funds.
Q1 Market Commentary
The Sprott Gold & Precious Minerals Fund Series A (“the Fund”) declined by 19.6% during the first quarter of the year, compared to a drop of 15.5% for the S&P/TSX Global Gold Total Return Index over the same period.
The majority of the negative performance during the quarter occurred during February as gold fell by 5% (in USD terms) and several bearish factors resulted in the Fund declining 14%. Amid growing optimism over the prospects of a global recovery, the US dollar rallied before the February 15th G20 meeting and, due to the fact that gold tends to move in the opposite direction of the US Dollar, gold bullion sold off as investors became less defensive. Another factor that impacted gold’s performance during February was declining Chinese demand as that country paused for days to celebrate their Lunar New Year. The shares of junior gold mining stocks, represented by the Market Vectors Junior Gold Miners ETF, declined 16.2% during the month as lower gold bullion prices dimmed prospects of improving company fundamentals.
At the end of the quarter, the Fund had approximate allocations of 60.0% to gold stocks, 9.6% to bullion (9:1 silver to gold) and 23.0% to silver stocks. Silver bullion, which maintains are very high correlation to gold, also endured a difficult February as it retreated 9.3% in USD terms. As silver is an industrial metal as well as a precious metal, any negative economic news out of large nations tends to have a more pronounced effect on silver than gold. Our largest silver positions are Silver Wheaton at 7.2% of the Fund and Pan American Silver at 3.7%. The Fund has 21 silver positions.
Subsequent to quarter end, during the first two days of April, precious metals endured dramatic selling pressure resulting from a SocGen research report that cast a negative on precious metals based on forecasts of low inflation, a recovering economy and a stronger US dollar. While these are not novel concepts, the report instigated considerable selling pressure on bullion and tremendous pressure on small cap miners.
Maximum pessimism represents maximum opportunity. While the sector may endure continued pressure, we believe small cap miners have been dramatically oversold and that, over time, we will be amply rewarded for maintaining an allocation to precious metals equities.
We also remain convinced that the immense amount of global money printing will at some point result in rising inflation, which should resurrect gold bullion prices.