Seven Investment Management has cut gold from most of its multi-asset portfolios as it moves towards general commodities.
7IM first started eliminating gold from its portfolios last November, when it was cut by 1 per cent across portfolios, and then again this February, with a further 2 per cent cut.
Now, it has dropped gold from most of its portfolios completely, leaving it only in its most cautious multi-asset portfolios, where it has halved gold’s exposure to just 2 per cent.
Phasing out gold signals the company’s strategy to move to broader, energy-linked, agricultural and industrial commodities over the next five years in a bid to minimise inflation risk.
7IM investment manager Matthew Yeates says: “Even if we are not expecting raging inflation any time soon, we should be prepared for inflation shocks and taper tantrum-type events that can hurt both equities and bonds.”
He says: “We like the diversification that commodities offer, so with pricing looking fair and the economic recovery seeming to still have legs, we believe that over the long term, general commodities can earn their keep in portfolios again.”