A new report by the World Gold Council (“WGC”) highlights that investors have begun to shift towards assets that are less liquid than conventional investments to improve portfolio performance. The council states that investors are also getting involved in riskier investment alternatives seeking higher yields, even with fixed income investments making up a large chunk of their portfolios.
The council believes that the investment appeal for gold will strengthen amid the shift to less liquid and riskier assets, given its usefulness as a highly liquid diversifier, which can decrease portfolio volatility. Anecdotal evidence from international conferences and investors, as well as data from Mercer and the Greenwich Coalition also suggests that investments in alternatives and assets such as infrastructure and real assets have been increasing.
Results from a market survey that was carried out recently in partnership with the Greenwich Coalition found that investors are currently targeting one-third of their portfolios in other assets and alternatives over the next three years.
The World Gold Council notes that as the market enters a period of even higher inflation, the primary characteristic of these investments, which needs to be taken into account is liquidity. In its report, the council explains that the reason the shift to illiquid assets is being emphasized on is because gold provides the liquidity and capital required during market selloffs. According to the World Gold Council, gold trades reach more than $100 billion daily, with the precious metal’s most accessible avenue, namely gold futures and gold-backed exchange traded funds, totaling $57 billion daily.
This particular metal is one of the primary assets sourced by investors to purchase distressed securities or grow portfolio capital as it usually cushions portfolio drawdowns. The council also highlights that gold usually bounces back quickly even after dropping in price during sharp market sell-offs, which improves portfolio performances. This is another reason why the metal is becoming an even more attractive investment.
For instance, during the March 2020 coronavirus selloff, gold sold off more than 10% over seven trading days before recovering to end the month flat. At the same time, listed private equity lost almost 30%, international hedge funds lost 6% and the S&P 500 ended March down 13%.
In its conclusion, the gold council notes that the metal would have reduced overall volatility of portfolios, adding that the use of gold to build positions in some distressed assets would have grown last year’s returns. While most assets ended 2020 modestly higher, gold finished the year 25% higher, all on its own. This paints an optimistic picture for the future of mining companies such as Asia Broadband Inc. (OTC: AABB), which are focused on precious metals extraction.
NOTE TO INVESTORS: The latest news and updates relating to Asia Broadband Inc. (OTC: AABB) are available in the company’s newsroom at https://ibn.fm/AABB
MiningNewsWire (MNW) is a specialized communications platform focused on developments and opportunities in the global resources sector. The company provides (1) access to a network of wire services via NetworkWire to reach all target markets, industries and demographics in the most effective manner possible, (2) article and editorial syndication to 5,000+ news outlets (3), enhanced press release services to ensure maximum impact, (4) social media distribution via the Investor Brand Network (IBN) to nearly 2 million followers, and (5) a full array of corporate communications solutions. As a multifaceted organization with an extensive team of contributing journalists and writers, MNW is uniquely positioned to best serve private and public companies that desire to reach a wide audience of investors, consumers, journalists and the general public. By cutting through the overload of information in today’s market, MNW brings its clients unparalleled visibility, recognition and brand awareness. MNW is where news, content and information converge.
To receive SMS text alerts from MiningNewsWire, text “BigHole” to 21000 (U.S. Mobile Phones Only)
For more information, please visit https://www.miningnewswire.com
MiningNewsWire is part of the InvestorBrandNetwork.