Gold is back as an asset class, according to Robeco's Arnout van Rijn, with investors turning to it as a "safe haven" amid war in the middle east and inflation concerns.
Robeco found gold has seen a 28 per cent return so far in 2024, outpacing equity returns.
Van Rijn, a portfolio manager within Robeco's multi-asset team, said: "Robeco wrote a white paper in 1992 where – although we were bullish on the price outlook – we declared gold to be irrelevant as an asset class.
"We argued that gold was no longer needed to hedge downside risk events, as derivative markets had become large and liquid enough to take on that role. Also, the expectation was for low inflation for the foreseeable future.
“Progressive insights 32 years after this paper and the return of inflation worries may mark the ‘revenge of the gold bugs’. Gold’s 28 per cent return so far in 2024 has particularly caused a stir, as it outpaces even strong equity returns. Since the white paper in 1992, gold has risen by an annualised 6.2 per cent."
He said it was now the time to reassess the approach to gold and said supply and demand are key to where the price of the asset will go.
Van Rijn said in countries where global conflicts are ongoing, gold remains an alternative to cash in the bank.
He added: "As multi-asset investors, we look at gold clinically. From a risk/return perspective, there is reason to allocate to gold. Since our 1992 white paper, returns have been healthy.
"Though its volatility is a drawback, gold offers diversification because it has been lowly (0.1-0.2) correlated with US Treasury bonds and equities, and actually has a negative correlation (-0.2) with other commodities.
“We would definitely not describe ourselves at Robeco as gold bugs – yet the multi-asset team has started a tactical allocation to gold, next to our broad allocation to commodities. Central bank demand, growing Asian wealth and right-wing liberals are the main reasons to be bullish.”
tara.o'connor@ft.com
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