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Pension funds increase gold allocations as bond diversification fades
World Gold Council said some pension funds built physical or futures exposure of roughly 2% to 5% between 2020 and 2021 as equity-bond correlation weakened.
Gold has taken on a more durable role in some pension-fund portfolios as investors seek protection from inflation and market shocks, the World Gold Council said, citing weaker diversification benefits from bonds.
Mining.com reports that examples of such allocations were mostly established by funds in the Netherlands, the United States, Britain and Australia between 2020 and 2021, and that those funds have maintained gold exposure of about 2% to 5% through physical metal or futures.
The World Gold Council said gold is receiving increased attention amid geopolitical tensions and inflation shocks, with some pension funds reassessing portfolio construction as the equity-bond correlation becomes less reliable.
It added that for pension funds wary of mining equities due to commodity-price swings and other company-specific risks, holding bullion can provide exposure to the gold sector without the same operational and geopolitical risks.
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