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'Perma-bear' Schiff's funds have been on a roll

Peter Schiff, CEO of Euro Pacific Capital, speaks at a panel discussion at the SALT conference in Las Vegas May 14, 2014.
Rick Wilking | Reuters
Peter Schiff, CEO of Euro Pacific Capital, speaks at a panel discussion at the SALT conference in Las Vegas May 14, 2014.

Call Peter Schiff a gold-bug perma-bear all you want, but he must be doing something right.

Despite his reputation as a perpetual Cassandra whose principal market call has been to buy gold and bet against the U.S. dollar, funds operated by Schiff's firm, Euro Pacific Capital, have been doing very well against their competitors over the past several years.

In fact, Euro Pacific's International Value Fund ranks in the top percentile against its 797 competitors, according to Morningstar rankings. It has done so while avoiding the U.S. market, which is on a 190 percent tear since the March 2009 financial crisis lows. Euro Pacific has most of its funds in privately managed and brokerage accounts and is a relative newcomer to the mutual fund industry, but the results provide a glimpse into how Schiff's strategy has performed.

"He's been called a perma-bear. Meanwhile, the last five years we've been fully invested in stocks," said Andrew Schiff, Peter's lower-profile brother. "Yeah, he's bearish on the U.S. economy, because we're a borrow-and-spend debt-fueled economy. He doesn't like that. He thinks it's a one-way street that's going to end badly. It doesn't mean he's a perma-bear."

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Peter Schiff said his investing thesis has been misunderstood due to the headline-grabbing nature of his gold advocacy. He's been a vocal critic of the Federal Reserve, which he believes is endangering the U.S. economy through its inflationary monetary policy, and continues to believe that inflation will cripple the domestic market.

"I talk about gold because hardly anybody else does. I do believe gold should be owned but I don't think it should be owned exclusively," he said. "I think people should have most of their money in equities. I just have a problem in the U.S. market because of the massive economic collapse I see in our future, and because our markets are overvalued."

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International Value is the firm's flagship mutual fund. With $76 million under management, it's certainly not among the market's heavyweights. But its performance is undeniable.

The fund carries an exposure heavily weighted toward so-called commodity countries like Australia, New Zealand and Canada. It underweights financials and is overweight equities tied to commodities as well as those with low price-to-earnings ratios.

As for returns, it has gained 9.85 percent in 2014, easily surpassing its MSCI global benchmark, which has risen just 2.8 percent. Over the past 12 months, it is up 10.7 percent, a shade below the benchmark return of 11.4 percent but still good enough to rank in the 23rd percentile of the group.

"This year things are working fairly well," Andrew Schiff said. "We're confident they will continue to do so."

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The firm's other funds are holding their own as well.

Euro Pacific's $70 million International Bond Fund ranks 65th out of 395 funds in its category, with a 3.6 percent return, about in line with its Barclays bond benchmark. Among its other offerings, the firm also has its Asia Small Companies Fund that is 18th this year in a field of 90 but ranks No. 1 over the past three years.

Schiff's returns also show that not all the financial market world's most prolific bears have been out their losing their shirts while stocks rally. "Dr. Doom" Marc Faber, for instance, pointed out in a CNBC interview that his stock picks in Barron's have returned an average 21.7 percent annually over the past 10 years.

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"My investing strategy is going to do best for people who are looking to get out of U.S. investments and seek better returns abroad," Peter Schiff said. "As these (U.S.) stocks start to blow up, more people are going to be looking for a safer bet."

—By CNBC's Jeff Cox

CORRECTION: : An earlier version misrepresented the three-year performance of Euro Pacific's International Fund.

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