World Gold Council Calls for Effective Addition of Gold to a DB Portfolio

SEATTLE (Scrap Monster): The UK Investment Report published by the World Gold Council (WGC) suggests that gold could be an effective addition to a UK Defined Benefit (DB) portfolio. This will not only contribute to the long-term growth of the pension funds, but will also provide necessary diversification, which in turn will help reduce funding level volatility.

According to WGC, Covid-19 created significant challenges for UK DB pension funds. Since then funding levels have steadily risen. At the end of June, the PPF 7800 index shows funding levels were at 120%, levels not seen in a decade. The gold trade body suggests that DB schemes should consider ways to protect their growth portfolio and narrow the range of potential outcomes.

WGC analysis says that gold is a clear complement to equities and broad-based growth portfolios. Gold has historically improved portfolios’ risk-adjusted returns, delivered positive returns, and provided liquidity to meet liabilities in times of market stress. In fact, gold has outperformed most broad-based portfolio components over the past two decades. The diverse sources of demand give gold a particular resilience, it added.