Accurately measuring gold mutual fund performance

Since the price of gold began climbing dramatically over a decade ago, gold-related industries have received a great deal of attention from investors. Moreover, investing in gold mutual funds has become a promising alternative to investing in gold directly because of the inherent difficulties involved in purchasing the commodity. However, gold's insensitivity to market factors requires a novel benchmark to adjust the returns of gold funds to risk. In the absence of this risk correction, gold mutual fund managers appear to perform systematically better than equity fund managers, although incorporating the new benchmark shows that this appearance is deceptive.