Gold is inching higher and investors wonder if it will outperform other asset classes. Advait Dharmadhikari explains why the outlook for gold in 2019 remains positive!
While most of the investors were focused on equity markets and the political events in India that may impact equity returns, one asset class that is widely held by Indians managed to show an impressive performance without making a lot of noise.
Gold is up by 7.3 per cent in CY18 and is up by 1.82 per cent on YTD basis in 2019. Gold outperformed equity yet again in 2018 as it did in 2008, 2010, 2011 and 2016.
Time and again the importance of asset allocation is discussed in financial literature. It is a known fact that the amount of wealth that any investor would generate is a byproduct of asset allocation in the long term. The outperformance of gold in 2018 shows the importance of being invested in the asset class. Indeed, for any investor, getting the asset allocation right is not only essential, but also the key to minimizing risks in investments. Smart investors have been taking exposure in the precious metal not expecting superior returns alone. The intention is to create a portfolio that delivers on a risk-adjusted basis. Gold can be an essential component of any portfolio that needs to deliver returns on a risk-adjusted basis. Says Sachin Surse, a seasoned investor, “ I always believed in asset allocation strategy and have focused on getting it right from the beginning. At any given point of time, I am invested in gold, equity, real estate and debt. After equity, if there is any other asset class that I am happy with, it is gold, as it has not disappointed me in terms of returns. And yes, it gives me the much-needed diversification in the overall portfolio and the best part about gold is its liquidity.”
Domestic vs international gold prices and exchange rates
This story is from the March 18, 2019 edition of Dalal Street Investment Journal.
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This story is from the March 18, 2019 edition of Dalal Street Investment Journal.
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