Investors should consider alternative ‘safe haven’ assets such as gold in their Defined Contribution (DC) investment portfolio, according to a report by the World Gold Council.
The case for rethinking traditional DC asset allocations has been set out by the WGC following rising geopolitical and inflation risks. For much of the last 15 years, the traditional DC portfolio made up of equities and bonds has performed well, driven by very low interest rates and quantitative easing. But against current uncertainty, and with the low yield of bonds, the WGC believes it is important to include assets that can help to act as economic shock absorbers.
According to the World Gold Council’s Jeremy De Pessemier, government bonds still have a role to play – although with inflation surging to a multi-decade high, it’s important not to rely on them as a portfolio diversifier.
This is where gold can start to play a role. Analysis shows that gold tends to perform well in times of high inflation and, in a changing environment, it can help investors protect the real value of their investment.
Read the World Gold Council’s full statement here.