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The case for gold in diversified superannuation strategies

This in-depth report reviews the role gold can play in diversified superannuation strategies. The findings presented are based on historical analysis of market data and superannuation funds across the risk spectrum from the early 1990s through to the end of 2020.

Found in the section titled Gold in diversified superannuation strategies, the report demonstrates that gold can improve risk adjusted returns at the portfolio level, primarily due to its historical ability to minimise overall portfolio downside in environments where diversified strategies decline in value.

This report also contains other sections pertinent to questions about the potential role of gold in Australian superannuation funds, including:

  • A review of the developments in the precious metal market in the past two and a half years, with gold firmly back on the investment radar after topping USD 2,000 per troy ounce for the first time ever in 2020.
  • The stand-alone attributes of gold as an asset class, from long-term returns to its relationship with real interest rates, and its correlation to equities.
  • Non-performance attributes of gold, including liquidity and investment costs.
  • A look at the gold price, its performance in previous market cycles, and whether the all-time high in the nominal price seen last year is indicative of a bubble.
  • Whether gold should be seen as a defensive or growth asset, or a hybrid of the two, as well as its unique qualities relative to other alternative assets.
  • How institutional investors can allocate to gold, looking at the pros and cons of gold futures, gold exchange traded funds (ETFs) and direct depository accounts.

 

Download the full paper here


 

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