Gold Seen Exploiting the Recent Shift to Less Liquid Investments

Though fixed income allocations continue to remain a strong choice, the demand has declined over the years, WGC noted.

SEATTLE (Scrap Monster): The most recently published Investment Update report by the World Gold Council (WGC) suggests that gold has benefited from the increased appetite for less liquid investments.

According to the report, there has been a notable shift in portfolio allocations to riskier and less liquid investment alternatives, which in turn has strengthened the case for gold. This is on account of its unique feature of being a highly liquid diversifier that can reduce portfolio volatility. Though fixed income allocations continue to remain a strong choice, the demand has declined over the years, WGC noted.

The results of a survey carried out among 500 leading global institutional investors indicate that investors expect one-third of their portfolios to be allocated to alternatives or other assets. The question of liquidity comes to the forefront as investors shift to more volatile assets like crypto currencies. Gold’s significance comes here, as it is less volatile than nearly all alternative investments options. It is on par or less volatile when compared with global equities, the report said.

The WGC report says that gold allocation could help in improving liquidity profile. Also, gold trades more than many other financial assets.

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