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Fund firms issue gold warning

Skandia, Fidelity Worldwide Investment and Eden Financial have warned investors they do not feel gold is a safe-haven asset.

Gold is skirting a bear market with gold futures trading at close to $1,593 an ounce on May 21, a 15 per cent drop from a high of $1,881 on August 29.

Skandia head of multi-manager Ryan Hughes, who oversees £4bn in the firm’s multi-manager range, says: “Gold is a dangerous asset for people who are buying it with the expectation it will be a hedge for the equity market. We have seen an increasing correlation between gold and equities this year.”

Fidelity Worldwide Investment director of asset allocation Trevor Greetham (pictured), who oversees the firm’s multi-asset portfolios, including the £619m Fidelity multi-asset strategic, cut the portfolios’ gold exposure to zero over the first few months of the year.

Speaking at the Fidelity FundsNetwork Investment Forum last week, he said: “Gold may be the best of the commodities in a slowdown, but it was the best of the commodities in 2008 before it fell 30 per cent, while the rest of the commodities fell 60 per cent. So I would be a bit nervous about the idea that gold is automatically great at a time like this.”

Eden Financial fund manager Mark Harris says: “Gold looks to have lost its way. It is yet to be determined if more quantitative easing and further European strife is going to get the rally going again.”

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