Sovereign Wealth Funds Investing In Gold For “Long Term Returns” – PwC
By: GoldCore
GoldSeek.com
Tuesday, 13 February 2018
– Gold has outperformed equities and bonds over the long term – PwC Research
– Gold is up 6.7% and 6.8% per annum over 10 and 20 year periods; Stocks and bonds returned less than 5.2% respectively over same period (see PwC table)
– From 1971 to 2016 (45 years), “gold real returns were approximately 10% while inflation increased 4%”
– Gold also valuable due to lack of correlation and hedge against inflation, currency devaluation and uncertainty
– Sovereign wealth funds investing 23% of assets under management to alternative investments including gold
– Gold being diversified into by HNW, family offices, institutions, pensions, sovereign wealth funds and central banks
Source: PwC Research via Bloomberg and WGC data
In new research, entitled ‘The rising attractiveness of alternative asset classes for Sovereign Wealth Funds‘ PwC explain how gold is viewed as an important diversifier by sovereign wealth funds, as both an important hedge and for long term returns.
PwC now class gold as a ‘re-emerging asset class’ on the basis of its long-term out performance of stocks and bonds, low correlation with traditional assets, resilience and high liquidity.
Gold along with private equity, real estate and infrastructure now accounts for 23% of a total $7.4 trillion of assets under management by sovereign wealth funds.
The report notes that from a peak of 40% in 2013, sovereign wealth funds’ investment into fixed income instruments such as government bonds declined to 30% by 2016. Due to record low bond yields, the funds decided to turn their attention to alternative assets to enhance returns.
The report notes the impressiveness of both gold’s long-term performance and low correlation to other assets in the long-term, compared to other alternatives. In the short-term the benefit of gold’s liquidity is noted:
“[It] has one of the highest rates of daily volumes exchanged and can provide protection against short and medium term market corrections.”
The Rest…HERE
