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Commodities Buzz: Gold Offers Excellent Protection As Alternative Asset

capital market | Mumbai | October 28, 2011 09:26 IST

Commodities Buzz: Gold Offers Excellent Protection As Alternative Asset

In the current economic environment, low real yields around the globe incentivise investors to look for additional sources of return, while increased uncertainty and market volatility have increased the importance of risk management, according to a latest update from the World Gold Council (WGC).

A distinct allocation to gold within a portfolio including alternative assets such as private equity, hedge funds, real estate and commodities, can preserve capital and reduce risk without diminishing long-term returns, concludes this latest research from the World Gold Council.

In summary, the report suggests that even if investors hold alternative assets, they are no substitute for the protection that a distinct allocation to gold can offer.

Findings demonstrate that portfolios with an allocation to gold of between 3.3% and 7.5% (depending on the risk tolerance of the investor and the currency of reference) show higher risk-adjusted returns while consistently lowering Value at Risk (VaR).

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