The Role of Gold in Today's Global Multi-Asset Portfolio
Investors have often used gold tactically in their portfolios, with an aim to help preserve wealth during market corrections, times of geopolitical stress or persistent dollar weakness. But given gold’s historically low or negative
correlation with most other asset classes, we believe that in addition to
gold’s tactical benefits, its function as a core diversifying asset may
demonstrate that gold can potentially play a more long-term strategic role in
an investor’s portfolio.
Physical-backed gold ETFs, like the SPDR Gold Shares, seek to provide investors a relatively transparent and cost-effective way to track the price of gold. We believe that as the size and the number of investable asset classes continue to grow, gold — an asset with historically low and negative correlation with other asset classes — may play a more central strategic role in multi-asset portfolios and the SPDR Gold Shares may offer investors the transparency and convenience in one cost-effective wrapper.
In this paper, we examine how including gold in a hypothetical multi-asset portfolio that also includes global stocks, various classes of fixed income, real estate, private equity, and commodities may improve its risk-return characteristics.