L1’s Long-Short Gold Fund Returns 235% as Bullion Gains 55%

A gold fund that launched in February 2025 has returned roughly 235% net through August 2026. Physical gold, over the exact same window, returned about 55%. That gap of nearly four to one is not a rounding difference, and it is not explained by the metal alone.

The fund is L1 Gold Fund Limited (ASX: LGF), an actively managed long-short gold equity vehicle run by Raphael Lamm and Mark Landau out of Melbourne. The 235% figure was disclosed publicly on 24 September 2026 via a Bloomberg report, and it refers to the underlying strategy’s track record.

The listed vehicle itself is newer. LGF debuted on the ASX in April 2026 at $2.00 per share, raising $950 million in its IPO. The timing is notable: bullion has fallen roughly 16% since late February 2026 and was trading around US$4,286/oz at the time of publication.

Here is what the fund actually did to produce that number, and what Australian investors watching the gold sector need to understand about the strategy driving it.

What 235% in 18 months actually means when gold itself returned 55%

The puzzle sits in the arithmetic. A fund tracking gold miners should move roughly with gold miners. This one moved several times faster, and understanding why starts with putting the three relevant benchmarks side by side.

Over the same February 2025 to August 2026 window, the VanEck Gold Miners ETF (GDX), the passive basket most comparable to LGF’s universe, returned approximately 148%. Physical gold returned about 55%. The fund returned approximately 235%.

The gap that matters for anyone assessing active management fees is not the one against bullion. It is the one against GDX. Beating physical gold by a wide margin can be explained by operating leverage alone; miners amplify gold price moves. Beating GDX by roughly 87 percentage points cannot. That gap is where stock selection and shorting live.

The gap between LGF’s 235% and physical gold’s 55% reflects a well-documented structural relationship: gold miners vs bullion diverge sharply across different cycle phases, with miners amplifying both upside and downside moves through their operating cost leverage.

The listed vehicle tells a smaller but consistent version of the same story. Since ASX listing on 24 April 2026, LGF has returned approximately 18% net while bullion fell about 6% over that same span.

Downside behaviour reinforces the point. During the April-June 2026 quarter, a negative period for the sector, the fund held up markedly better than the passive alternative.

During the April-June 2026 quarter, the listed fund returned -10.9% against roughly -20% for GDX in AUD terms.

For an Australian institution or self-managed super fund weighing an allocation, that combination reads clearly. The outperformance is not simply a gold price story. The fund generated alpha against the benchmark closest to its own strategy, which means construction and selection, not just the tailwind, did the work.

How the fund was built to outperform in both directions

The return figure is the outcome. The exposure architecture is the mechanism, and it is built to make money whether individual miners rise or fall.

Start with the long book. As at 30 June 2026, the fund held 27 long positions, concentrated in companies with market capitalisations of US$5 billion and above. Selection prioritises lower valuations and strong near-term cash-flow potential, the operators the market has under-owned rather than the story stocks it has crowded into.

The fund runs three distinct mechanisms simultaneously:

• Long equity positions in gold producers judged undervalued relative to their cash-flow profile
• Short positions in gold equities considered overvalued or facing operational problems
• Short gold futures or physical gold as a macro hedge against a weakening bullion price

The exposure figures show this is no timid hedge. Gross long exposure sits at 167%, gross short exposure at approximately 99%, and net long exposure in the low- to mid-60% range. Fund AUM is approximately $1.5 billion (around US$1.1 billion).

That combination matters. A gross long of 167% paired with a net long around 60% tells you the fund is running meaningful leverage on both sides at once. It is what creates the return potential, and it is also what concentrates the risk in ways a passive ETF allocation never would.

The role of short positions in managing downside

The short book is not purely defensive. When shorted names underperform or decline on operational trouble, those positions actively add to returns rather than merely cushioning losses.

The stated intent is a split. Short gold futures and physical positions guard against weakening bullion prices at the macro level, while the short equity positions and long selection generate return from stock-specific outcomes on both sides.

For an investor deciding whether the 235% reflects genuine selection skill or a leveraged bet on the gold cycle, this structure is the crux. The hedging is what lets the managers claim the return came from picking miners, not just from owning them into a rally.

Where management sees gold from here, and what it is doing about it

Gold has fallen roughly 16% since late February 2026, a decline management ties to the US-Iran conflict that erupted that month. The managers do not treat it as a warning. They treat it as temporary.

Their reasoning rests on long-term macro drivers: fiscal deficits and sustained central-bank buying, both cited as structurally supportive of the gold price regardless of the recent pullback. That is a conviction, and convictions are cheap. What separates this one is that the fund has already acted on it with a disclosed, quantified trigger.

Central bank gold demand and fiscal deficit dynamics, the two macro drivers management cites as structurally supportive, have historically shown a lagged relationship with the spot price, with central bank accumulation often accelerating precisely when institutional confidence in fiat reserves erodes.

The fund began aggressively adding to long equity positions when gold dipped below US$4,000/oz.

That is not general sentiment. It is a specific entry threshold that can be tracked against the actual gold price in the weeks ahead. With bullion around US$4,286/oz at publication, it also tells you the managers see current levels as opportunity rather than a broken thesis. Management has indicated it would only consider reducing long positions if the anticipated gold price appreciation fully materialises.

The August capital raising backs the conviction with money. Announced 24 August 2026, it comprised a non-underwritten institutional placement of up to approximately $160 million, plus a 1-for-3 non-renounceable entitlement offer at $2.25 per share, a price equal to the pre-tax net tangible asset (NTA) value per share as at 20 August 2026.

Both co-managers put their own capital in. Lamm and Landau each increased their personal commitments to the fund through the entitlement offer.

For investors following LGF on the ASX, the signal is coherent. An aggressive buying stance below US$4,000/oz, a raise conducted at NTA rather than a discount, and insiders adding to their own stakes all point the same direction.

What the risks look like from the outside

None of this removes the structural vulnerabilities of running a concentrated, leveraged book in a sector defined by binary news flow. The risks are features of the strategy, not accidents, and they deserve fair weight against the headline return.

• Gold price reversal risk. The hedges reduce exposure to falling bullion but do not eliminate it. A prolonged decline can compress miner margins faster than the shorts compensate.
• Liquidity and crowding in mid-cap miners. Limited free float means a concentrated fund can become a large share of the register, amplifying volatility and making exits difficult in stress scenarios.
• Short-squeeze and event risk. With gross short exposure near 99%, unexpected discovery results, corporate bids, or recapitalisations can trigger fast, violent squeezes that force covering at unfavourable prices.
• Key-person concentration. Performance is explicitly tied to Lamm and Landau, a dependency the fund’s disclosures acknowledge as material.

The most recent stress-test data point offers genuine reassurance on one front. The -10.9% Q2 2026 drawdown against GDX’s roughly -20% shows the downside management is real, not theoretical.

But it does not cover everything. That gross short exposure of roughly 99% carries event and liquidity risk that never shows up in the net exposure figure alone. A net long in the low-60s looks moderate; the two large gross books underneath it do not.

Scale is a double-edged consideration too. The broader L1 Group manages approximately US$14 billion, which places LGF inside an established institutional manager rather than a startup boutique. Lamm has cited an addressable market exceeding US$1 trillion across the ASX, TSX, NYSE American, JSE, and LSE. Yet LGF itself, at around $1.5 billion, is already meaningful size for a mid-cap gold equity strategy, and mid-cap liquidity is finite.

For a superannuation fund or family office eyeing LGF as a satellite allocation, the read is balanced. The downside record is encouraging; the concentration and leverage are exactly what a prudent allocator would cap.

ASX gold ETF alternatives occupy a different part of the risk spectrum from LGF: they carry no short-book event risk and no key-person concentration, though they also forgo the stock-selection alpha and downside hedging that the fund’s structure provides.

What a 235% return in a volatile gold market signals for active management in the sector

Two forces produced the number. A rising gold cycle from February 2025 lifted the whole sector, and a passive allocation would have captured much of it. The rest, the part GDX did not capture, came from stock selection and shorting.

That alpha isolates cleanly: approximately 87 percentage points above GDX over the same period.

The confirmation that the 235% is real is not the interesting question anymore; the benchmark comparison settles it. The interesting question is whether it repeats. The conditions that produced it, a rising cycle and a fund still nimble enough to move in mid-cap names, are precisely the conditions that erode as AUM grows toward and beyond $1.5 billion. Liquidity in mid-cap miners does not scale with a fund’s ambitions.

The ASX listing itself changes the accessibility equation for Australian investors. NAV growth is visible in the simplest terms: an IPO price of $2.00 in April against the $2.25 entitlement offer in August. More importantly, a strategy once available only through an unlisted vehicle is now reachable by self-managed super funds and retail investors through a brokerage account.

That is the real shift here. The return profile is no longer the exclusive preserve of institutional allocators, which means the questions institutions ask about capacity and key-person risk are now yours to weigh too.

For investors weighing LGF as a satellite allocation and wanting to understand how it fits within a broader precious metals exposure, our dedicated guide to gold mining portfolio construction covers position sizing, cycle-phase allocation, and the trade-offs between active funds, ETFs, and direct miner holdings.

This article is for informational purposes only and should not be considered financial advice. Investors should conduct their own research and consult with financial professionals before making investment decisions.

Past performance does not guarantee future results. Financial projections are subject to market conditions and various risk factors.