WGC: Gold is a Risk Diversifier and Inflation Hedge

Gold has contributed in limiting losses and reducing portfolio risks.

SEATTLE (Scrap Monster): The World Gold Council (WGC) published a new report highlighting the need for including gold in an Australian super fund’s portfolio. It details the role of gold as a risk diversifier and inflation hedge.

According to WGC, geopolitical uncertainty, inflationary concerns and rising interest rates in key markets have impacted global financial markets in the first quarter. The gold prices in Australian dollars registered 4% surge in Q1 this year. Investors are likely to witness additional challenges in the near future.

As per WGC analysis, a 10% allocation to gold during the first quarter would have led to lower volatility and losses in a representative hypothetical super fund portfolio. Over the past 15 years, a hypothetical average super fund portfolio with 10% gold would have seen a higher return, lower volatility and less dependency on global equities compared to a portfolio without gold.

Gold has contributed in limiting losses and reducing portfolio risks. In addition to limiting losses, gold is also a long-term strategic asset, WGC noted.

The latest data published by the Australian Prudential Regulatory Authority (APRA). Australian superannuation funds are heavily concentrated in bonds and equities.

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