SINGAPORE (May 14): Gold has traditionally been seen as a tactical way to help preserve wealth during market corrections, times of geopolitical stress or persistent US dollar weakness. Although geopolitical tensions have receded in recent months, an unorthodox US president continues to unnerve at unexpected moments. While long-term investors are unlikely to manage their portfolios based on a tweet, gold could turn out to be a stabilising force during market volatility.
Now, some portfolio managers are arguing that gold should be an inherent part of portfolios at all times. In a recent blog, George Milling-Stanley, State Street Global Advisors’ head of gold strategy, and Robin Tsui, its exchange-traded fun (ETF) gold specialist, argue that there is a case to be made for gold as a core diversifying asset with a long-term strategic role in multi-asset portfolios.
“The expanding universe of investable asset classes and the relative ease of shifting across different assets mean that multi-asset portfolios today look different from the ‘balanced’ stock and bond funds of the past. Gold’s historically low or negative correlation with most other asset classes argues in favour of a strategic allocation for long-term investors,” Milling-Stanley and Tsui say.