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Gold and silver funds have topped the charts as this year’s best performers, as the precious metals have rocketed to record highs.
The UK’s top 10 performing funds run by managers in 2025 were all invested in gold, miners or precious metals, according to Morningstar Direct, with the leader being Franklin Gold and Precious Metals, which returned 184 per cent in the year to mid-December.
The sparkling performance comes after gold and silver rallied to record highs, driven by geopolitical instability, a move by central banks to diversify from the dollar, persistent inflation, and a “fear of missing out” on the rally among investors.
The price of gold has surged by about 60 per cent this year to more than $4,300 a troy ounce. Silver also reached a record high in December of more than $60 an ounce, driven by a scarcity of supply and a surge in demand.
“Gold and precious metals have been leading the way in 2025 with some astonishing returns,” said Darius McDermott, managing director of fund rating service FundCalibre. “What is also worth observing is that there have been very strong returns from most equity markets this year, too, and not just the US.”
Among the top funds were SVS Baker Steel Gold and Precious metals, Schroder International Selection Fund Global Gold, BlackRock World Gold fund and the Jupiter Gold and Silver fund.
Similarly, the top 10 performing funds on sale in Europe were also focused on gold and precious metals.
Kenneth Lamont, principal at Morningstar, said that as a result of gold prices reaching record highs, Europe’s best-performing funds “are overwhelmingly concentrated in precious metal-focused strategies.”
However, he added that “India-focused funds feature repeatedly among the worst performers.
“Tariff [challenges] have weighed on growth expectations, while a tumbling rupee has pushed Indian equity returns into negative territory for UK investors this year.
“Funds with significant exposure to Indian technology stocks were hit particularly hard, as profits were squeezed by falling global demand for outsourcing and IT services.”
Daniel Casali, chief investment strategist at wealth management firm Evelyn Partners, noted that gold “can play a useful role in investment portfolios as an alternative asset that can provide diversification and balance to more traditional asset classes like equities and bonds.”
He added: “With Western public debt continuing to rise and gold’s proven role as an inflation hedge, as evident in 2022, when equities and bonds fell while gold held steady, holding bullion provides resilience amid geopolitical and financial uncertainty.”
Laith Khalaf, head of investment analysis at AJ Bell, noted that “the conditions which have created the gold rush don’t look like abating, and lower interest rates should be positive for the precious metal.
“However despite its reputation as the ultimate safe haven, gold is volatile, and buyers should beware there can be steep downdrafts and long periods in the wilderness.”
Still, gold’s rally has sparked a warning from the Bank for International Settlements. It said gold and US stocks showed the hallmarks of a bubble, noting the “exuberance” of retail investors as well as rocketing prices and hype.
“The past few quarters represent the only time in at least the last 50 years in which gold and equities have entered this territory simultaneously,” the BIS noted. “Following its explosive phase, a bubble typically bursts with a sharp and swift correction.”
