FSAGX: Fidelity Select Gold Portfolio Explained

FSAGX is the ticker for the Fidelity Select Gold Portfolio, a mutual fund Fidelity has run since 1985. If you bought it expecting to own gold, the most important fact is this: it is mainly a fund of gold mining stocks. It is not a fund that tracks the price of gold.

That one difference explains most of the confusion online. It explains why gold can rise $100 while FSAGX falls on the same day. It also explains why the fund can soar when gold has a strong year and get crushed when gold stalls.

This guide covers what the fund holds, what it costs, how it moves, how it is taxed, and how it compares with gold ETFs and physical metal.

What FSAGX actually is

Fidelity's stated policy is to normally invest at least 80% of assets in companies principally engaged in gold-related activities, and in gold bullion or coins. In practice, almost all of the fund is in stocks. That includes:

• Large gold miners. Companies that dig gold out of the ground, often with mines on several continents.
• Royalty and streaming companies. They finance mines in exchange for a cut of future production. They don't run the mines.
• Mid-size and smaller miners and developers. These are riskier, and their prices can swing much harder.
• A small slice of bullion. The fund is allowed to hold some physical gold, but it is a minor part of the portfolio. Check the fund's latest holdings report for the current share.

The top holdings usually include the biggest names in the industry. Major producers and royalty companies typically make up a large share of assets. Fidelity publishes the full list with a lag, so treat any list you see as a snapshot.

It is actively managed. A portfolio manager picks the stocks and their weights instead of copying an index. That is why it costs more than an index fund like GDX, and why its results can differ from the miner index, better or worse.

Key facts at a glance

Figures like fund size and expense ratio change over time. Fidelity's fund page and the prospectus are the final word.

Why FSAGX moves differently than gold

1. Miners are leveraged to the gold price

A mining company's profit is roughly the gold price minus its cost to produce an ounce. Here is a simple hypothetical:

• Gold is $2,000/oz and the miner's all-in cost is $1,400/oz. Its margin is $600.
• Gold rises 10% to $2,200. The margin grows to $800, which is 33% higher.
• Gold falls 10% to $1,800. The margin drops to $400, which is 33% lower.

A 10% move in gold became a 33% move in profit. Stock prices tend to follow profits, so gold mining funds often move two to three times as much as gold, in both directions.

2. Miners have their own problems

Mining stocks carry risks that a gold bar does not:

• Rising costs. Energy, labor, and equipment costs can climb.
• Mine trouble. A flooded pit or a delayed project can hit a single stock hard.
• Politics. New taxes or permit fights in the countries where mines operate.
• Management decisions. Expensive acquisitions or too much debt.
• The stock market. When stocks sell off broadly, miners often get sold too, even if gold holds up.

This is why FSAGX can lag gold for long stretches, even in years when gold does well.

3. Mutual fund pricing is once a day

Gold trades nearly around the clock. FSAGX gets one price per day, its NAV, calculated from the closing prices of its stocks after the 4 p.m. Eastern close. If you check gold during the day and then check FSAGX at 5 p.m., you are comparing two different things measured at different times. Miners also often react to news about their own companies and to the broader stock market, not just to gold.

You can watch the live gold price on our gold price today page. To understand what's pushing the metal on a given day, see why is gold moving.

FSAGX vs. other ways to own gold

A few takeaways:

• If you want the gold price itself, a bullion ETF or physical metal does that job. FSAGX doesn't. Our gold ETF guide compares GLD, IAU and GLDM. The gold bullion guide covers coins and bars.
• If you want a bet on gold companies, FSAGX and GDX are the main options. You're choosing between a manager's picks with a higher fee and a cheaper index. Our gold stocks guide goes deeper on miners versus metal.
• If you want something you can hold outside the financial system, only physical metal does that. See how to buy gold for a first-timer's checklist.

How FSAGX is taxed

This is a quiet advantage that many people miss.

• Physical gold and bullion ETFs like GLD are taxed as collectibles. Long-term gains face a federal rate of up to 28%.
• FSAGX holds stocks. Long-term gains on your FSAGX shares are generally taxed at regular long-term capital gains rates, which top out lower than 28% for most brackets.

There is a catch. Mutual funds pass along capital gains distributions, usually in December. If the manager sold winning stocks during the year, you can owe tax in a taxable account even if you never sold a share. In a big year for miners, that bill can be noticeable.

Holding FSAGX in an IRA or 401(k) avoids both issues until you withdraw. Tax situations vary, so confirm with a tax professional or the IRS guidance on capital gains.

Fees and trading rules to check

• Expense ratio. About 0.64% recently. On $10,000, that's roughly $64 a year, taken out of the fund's returns automatically.
• Minimums. At Fidelity, the minimum to buy is typically very low or zero. Other brokers may charge a transaction fee or require a minimum.
• Short-term trading. Sector funds sometimes have rules or fees for shares sold soon after purchase. Read the current prospectus before trading in and out.
• No intraday trading. Orders fill at that day's NAV. You can't set a limit price the way you can with an ETF.

How FSAGX has performed

Gold mining funds have a reputation for wild rides, and FSAGX fits it. A few patterns stand out:

• Big drawdowns. In the 2011–2015 gold bear market, gold fell roughly 40% from its peak, and miner funds lost much more. Many gold mining funds dropped by more than half.
• Big rebounds. When gold rallies, miners often outrun it. Stock Analysis reported a total return of about 24% for FSAGX over the year before its listing snapshot.
• Long-run results aren't much smoother. Since 1985, the fund's average annual return has been in the high single digits, but the path got there through repeated booms and busts.

To see how gold itself moved over the same periods, check gold price history. Past returns don't predict future ones, and that applies doubly to a sector this volatile.

Who FSAGX tends to suit, and who it doesn't

This isn't a recommendation either way. Here are the trade-offs laid out plainly.

It may fit people who:

• Want exposure to gold companies, not just the metal, and accept bigger swings for that.
• Already use Fidelity and want a no-load fund they can buy commission-free.
• Prefer an active manager picking miners over a pure index.
• Value stock-style tax treatment over the 28% collectibles rate.

It may frustrate people who:

• Expect it to follow the gold price day to day.
• Can't stomach a 30%–50% drop. That has happened to miner funds more than once.
• Want the lowest possible fees. GDX and bullion ETFs cost less.
• Hold it in a taxable account and dislike surprise year-end distributions.

Quick checklist before you buy or sell FSAGX

1. Decide what you want to own: gold companies or gold itself.
2. Pull up the current fact sheet on Fidelity's site for the expense ratio, top holdings and any trading rules.
3. Compare it to GDX to see whether active management has earned its higher fee lately.
4. Check your account type. Taxable accounts get hit by distributions. IRAs don't, until withdrawal.
5. Size it as a satellite. Because it's a single, volatile sector, many investors keep it a small slice of a portfolio.
6. Remember the timing. Orders placed before 4 p.m. Eastern get that day's NAV. Orders after 4 p.m. get the next day's.

The bottom line

FSAGX is Fidelity's actively managed gold mining fund. It owns mostly miner and royalty stocks, with only a little actual gold. That makes it a leveraged, company-risk-laden way to play gold. It can beat the metal handily in good years and fall much harder in bad ones, and it won't track the price you see on a gold chart. It is taxed like a stock fund rather than a collectible. If you want the metal itself, look at bullion ETFs or coins and bars. If you want gold companies, FSAGX is a reasonable, mid-cost option to weigh against GDX.