Gold as a Source of Capital Preservation

Gold hedges against extreme inflation situations such as deflation and hyperinflation. Independent analysis from Oxford Economics shows that investors with an average risk profile can benefit from adding a gold allocation of around 5% to their long-term portfolio. Gold’s optimal share in an average risk portfolio rises in a scenario with higher inflation and is also seen to rise for low risk investors in a lower growth and lower inflation environment. The optimal allocation of assets in a Multi-Asset Multi-Asset Composed of varying asset classes, multi-asset is a blanket designation combining different classes such bonds, equities, cash equivalents, fixed income, and alternative investments.When compared to traditional balanced funds, multi-asset solutions differ because they target specific investment outcomes. This includes outcomes such as return above inflation as opposed to gauging performance against standardized benchmarks.Given the composition of multi-asset classes, they need to be dynamically Composed of varying asset classes, multi-asset is a blanket designation combining different classes such bonds, equities, cash equivalents, fixed income, and alternative investments.When compared to traditional balanced funds, multi-asset solutions differ because they target specific investment outcomes. This includes outcomes such as return above inflation as opposed to gauging performance against standardized benchmarks.Given the composition of multi-asset classes, they need to be dynamically Read this Term portfolio depends on the aim of the investor, the nature and duration of their liabilities, and the degree of risk that the investor is prepared to take. Lower risk investors place more emphasis on reducing the riskiness of their overall portfolio and allocate investment to assets such that portfolio returns are less volatile. Consequently, the table below illustrates that investors with a lower risk tolerance will be attracted to assets whose returns are negatively correlated with other assets, such as gold, as the diversification decreases portfolio Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad Read this Term. Higher risk portfolios place more of an emphasis on boosting returns and will allocate investment in line with higher absolute returns at the expense of the lower volatility generated through diversification.