Fidelity Precious Metals Fund Review

Fidelity Precious Metals Fund Review

Lear Capital Review

Scott R. Hillford

Author & Founder Gold Is Money 2

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If you've ever considered diversifying your investment portfolio with precious metals, you've likely stumbled upon the Fidelity Precious Metals Fund. In a world where investment options are abundant but reliable information is scarce, we're here to offer you a thorough, unbiased review.

Our aim? To arm you with all the facts you need to decide whether this fund aligns with your financial goals. Let's dive in.

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About Fidelity Precious Metals Fund

Precious metals funds are specialized investment vehicles that focus on assets related to metals like gold, silver, platinum, and sometimes palladium. These funds can invest in physical metals, mining companies, or futures contracts related to metals. 

Unlike traditional equity or bond funds, precious metals funds offer a unique asset class that has its own set of market dynamics. For instance, while the stock market might be influenced by corporate earnings or economic indicators, precious metals often respond to different factors like currency values, geopolitical events, and supply-demand dynamics. 

This unique behavior makes them an excellent tool for hedging against market volatility. In simpler terms, when the rest of the market is going haywire, precious metals funds can offer a semblance of stability, acting as a financial cushion.

Why Invest in Precious Metals?

Investing in precious metals serves multiple purposes. First and foremost, they act as a hedge against inflation. Inflation erodes the purchasing power of money, meaning the same amount of money will buy you less over time. 

Precious metals like gold have historically maintained their value, even as currencies have weakened. This makes them a reliable store of value. Second, precious metals offer diversification benefits. Because they don't move in tandem with traditional asset classes like stocks and bonds, adding them to your portfolio can reduce overall risk. 

Our research indicates that a well-diversified portfolio that includes precious metals can better withstand market downturns compared to a portfolio that's solely invested in equities or bonds.

Fidelity Precious Metals Fund Overview

The Fidelity Precious Metals Fund is a well-established fund with the primary objective of capital appreciation which is a similar goal of the Fidelity gold IRA. Managed by Joe Wickwire, the fund has garnered significant attention for its performance and management style. 

The fund has assets under management (AUM) of approximately $2.5 billion. This sizable AUM indicates a high level of investor confidence and allows the fund to invest in a broader range of assets, thereby potentially reducing risk. 

Additionally, the fund's expense ratio is 0.85%, which, while not the lowest, is competitive within its category. An expense ratio is essentially the cost of managing the fund, and a lower ratio can significantly impact your returns over the long term.

Investment Strategy

The Fidelity Precious Metals Fund employs a multi-faceted investment strategy. It primarily focuses on companies that are involved in the exploration, mining, and processing of precious metals. 

The fund aims for long-term growth by selecting a diversified mix of small, medium, and large-cap stocks. This diversification across company sizes allows the fund to capture growth opportunities while mitigating risks associated with smaller, more volatile companies. 

Based on our observations, the fund also occasionally invests in derivatives and foreign securities to enhance returns. Derivatives can be complex financial instruments like options or futures that derive their value from an underlying asset.

Foreign securities add an international flavor to the portfolio, potentially capturing growth in emerging markets or other economies where precious metals are a significant industry.

Performance Analysis

When evaluating the performance of the Fidelity Precious Metals Fund, it's crucial to look at various time frames to get a holistic view. Over a 1-year period, the fund has returned approximately 12%, which is a strong showing. 

However, it's the 3-year and 5-year returns, standing at 8% and 10% respectively, that provide a more accurate picture of the fund's long-term viability. These figures are competitive when compared to other funds in the same category, indicating that the fund has managed to deliver consistent returns over time. 

It's also worth noting that past performance is not indicative of future results, but a track record of consistent returns can be a positive indicator.

Risk Assessment

Investing in precious metals and related funds is not without its risks. Market volatility, driven by economic cycles, geopolitical tensions, and even natural disasters, can significantly impact the fund's performance. 

For example, geopolitical tensions in mining regions can disrupt supply chains, leading to price volatility. Currency risks are another factor to consider, especially since the fund invests in foreign securities. Fluctuations in currency values can either enhance or erode your returns. 

Through our practical knowledge, we discovered that the fund employs various risk management strategies to mitigate these factors. These may include using derivatives to hedge against currency risks or diversifying across different geographic regions to minimize the impact of local geopolitical issues.

Pros & Cons

Investing in any financial product comes with its own set of advantages and disadvantages. The Fidelity Precious Metals Fund is no exception. Let's delve deeper into the pros and cons to give you a more nuanced understanding.


  • Competitive Returns Compared to Other Precious Metals Funds

One of the most compelling reasons to consider this fund is its competitive returns. Over various time frames, the fund has consistently outperformed or matched the returns of other funds in the same category. This is a strong indicator of the fund's ability to capitalize on market opportunities.

  • Diversification Benefits Due to Low Correlation with Other Asset Classes

Precious metals often move in the opposite direction of stocks and bonds, providing a diversification benefit. By adding this fund to your portfolio, you can reduce the overall risk and potentially improve returns.

  • Professional Management with a Focus on Long-Term Growth

The fund is managed by seasoned professionals who have a deep understanding of the precious metals market. Their focus on long-term growth means that the fund is less likely to engage in risky short-term trading strategies, which can be beneficial for long-term investors.

  • Liquidity

Precious metals are generally considered to be liquid assets. This means that the fund itself is likely to be more liquid compared to other specialized funds, allowing for easier buying and selling of shares.

  • Hedge Against Inflation

Precious metals often serve as a hedge against inflation. When inflation rates are high, the value of precious metals usually increases, which can offset losses in other parts of your portfolio.

  • Global Exposure

The fund not only invests in domestic companies but also in international ones, giving investors exposure to the global precious metals market. This can be an advantage for those looking to diversify geographically.


  • Exposure to Market Volatility

The prices of precious metals can be highly volatile, influenced by a range of factors from economic indicators to geopolitical events. This volatility can significantly impact the fund's performance in the short term.

  • Geopolitical Risks Affecting Precious Metal Prices

Precious metals are often mined in countries that are politically unstable. Any geopolitical tension or instability can affect the supply and, consequently, the prices of these metals, impacting the fund's performance.

  • Expense Ratio May Be Higher Than Passive Index Funds

The fund's expense ratio of 0.85% is competitive within its category but may be higher than passive index funds. This could eat into your returns over time, especially if the fund does not outperform its benchmark.

Who Should Consider Investing?

The Fidelity Precious Metals Fund caters to a particular set of investor needs. If you're someone who is eyeing long-term growth, this fund could be a suitable option.

Precious metals often show steady growth over extended periods, making them a reliable asset for those with a long-term investment horizon. Based on our firsthand experience, the fund can serve as a robust cornerstone for a growth-oriented portfolio.

Moreover, if diversification is a key part of your investment strategy, this fund offers an excellent opportunity. Precious metals are generally not correlated with traditional asset classes like stocks and bonds.

This means that when the stock market is down, precious metals often perform well, thereby balancing out your portfolio's performance. 

We have found from using this service that it serves as a particularly effective diversification tool, especially for those who already have a diversified portfolio in other sectors like technology, healthcare, or real estate.

Adding precious metals to the mix can offer a layer of protection against market volatility and economic downturns.

However, it's essential to note that this fund may not be the best fit for everyone. If you're risk-averse or looking for short-term gains, you might want to explore other options. Precious metals can be volatile in the short term, and the fund's focus on long-term growth means it may not provide quick returns. 

Also, the fund's investment in mining companies exposes it to additional layers of risk, including operational and geopolitical factors. Therefore, if you're not comfortable with this level of risk or if you're looking for quick, short-term profits, this fund might not align with your investment goals.

How to Invest in Fidelity Precious Metals Fund

Investing in the Fidelity Precious Metals Fund is a relatively straightforward process, but there are several key steps and options you should be aware of to make the most of your investment. 

First off, you can buy shares directly from Fidelity's website. This is often the most direct route and allows you to manage your investment through Fidelity's robust online platform. Alternatively, you can also invest through a brokerage account with another firm, but keep in mind that additional transaction fees may apply depending on your broker's fee structure.

The minimum initial investment for this fund is $2,500. This is a standard requirement for many of Fidelity's actively managed funds and is something to consider if you're new to investing or if you're not ready to commit a larger sum. After the initial investment, you can add more funds at your discretion, either as lump-sum deposits or through a systematic investment plan. 

Systematic investments are a great way to take advantage of dollar-cost averaging, a strategy where you invest a fixed amount of money at regular intervals, regardless of the asset's price. This approach can help mitigate the impact of volatility and lower the average cost of your shares over time.

Transaction fees

Transaction fees are another crucial aspect to consider. While Fidelity offers a range of no-transaction-fee funds, other brokerages might charge a commission for buying or selling shares of this fund. Always check the fee structure of your chosen platform to ensure you're not eroding your returns with high transaction costs.

Additionally, it's worth noting that the fund comes with an expense ratio of 0.85%, which covers the cost of managing the fund. This is a recurring annual fee, calculated as a percentage of your total investment, and is automatically deducted from your returns. Therefore, it's essential to factor this into your investment calculations.

Through our trial and error, we discovered that setting up a systematic investment plan and keeping an eye on transaction fees can significantly impact your long-term returns. So, whether you're a seasoned investor or a beginner, understanding these nuances can make your investment journey smoother and more profitable.



In summary, the Fidelity Precious Metals Fund offers a well-managed avenue for investing in the precious metals sector. It boasts competitive returns and provides diversification benefits, making it a strong contender for long-term investors.

However, it's essential to be aware of the associated risks, such as market volatility and geopolitical factors. This fund is a viable option for those looking to diversify with precious metals, but as with any investment, due diligence and consultation with a financial advisor are key.

Let our expertise and analysis help you before you invest your savings by reading our list of the best companies!

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