“Optimizing Gold Allocation: Insights from Mutual Fund Experts”
A study conducted by the World Gold Council (WGC) unveils that allocating below 5% or above 15% to gold can result in suboptimal risk-weighted returns.Cafemutual engaged with industry experts to discern the recommended allocation of gold ETFs by Mutual Fund Distributors (MFDs).
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Gold
Abhishek Singhal, Head of Passives and Alternate Strategy at Aditya Birla Sun Life MF, advocates for MFDs to advise clients to allocate 5-10% of the total investible corpus to ETFs. Singhal underscores gold’s significance as an asset class, providing a hedge against volatility in equities and inflation over the long term.
Chirag Mehta, Chief Investment Officer at Quantum MF, suggests MFDs allocate 10%-15% of total assets to . Mehta emphasizes gold’s resilience during equity downturns, positioning it as an ideal asset class during volatility. He recommends a minimum 10% allocation to derive diversification benefits and a maximum of 15% for optimal returns, cautioning against exceeding 15% as it could be counterproductive.
Chintan Haria, Principal – Investment Strategy at ICICI Prudential MF, advocates for a combined exposure of 10% to 15% in both gold and silver ETFs. Haria highlights geopolitical developments and global central banks’ preference for over US Treasuries as factors supporting commodity prices in 2024.
Mahavir Kaswa, Senior Vice President of Research in Passive Funds at Motilal Oswal MF, suggests a minimum 10% allocation to gold ETFs. Kaswa attributes short-term market volatility as a catalyst for gold’s upward movement, recommending investors maintain 10% of their investment in gold.
Vikram Dhawan, Head of Commodities and Fund Manager at Nippon India MF, proposes a 5% to 15% allocation to gold ETFs. Dhawan tailors allocation based on investors’ debt or equity skew, recommending 5% for debt-heavy portfolios and 15% for equity-heavy ones. He extols gold’s ability to deliver returns in volatile markets and its role in portfolio diversification, emphasizing its stability and regulatory adherence internationally.
