Amid Economic, Geopolitical Uncertainties, Majority of Financial Advisors Expect To Increase or Maintain Allocations To Gold
- Vast Majority of Advisors (87%) Currently Allocate Assets to Gold
- Role as a Portfolio Diversifier is Top Reason Cited For An Allocation to Gold
- Physically Backed Gold ETFs Attract Most Assets
State Street Global Advisors, the asset management business of State Street Corporation (NYSE:STT) and the World Gold Council, today released the results of its Gold Perceptions Survey, which is designed to better understand how current market conditions are impacting perceptions of gold across investor cohorts. According to the research, 29% of financial advisors in North America plan to increase allocations to gold over the next 12 to 18 months, 62% report their allocations to gold are expected to remain the same and 9% believe they will decrease the percentage of client assets invested in gold.
"While interest rates are widely expected to be cut during the next 12 months, advisors' allocations to gold have remained fairly consistent," said George Milling-Stanley, Chief Gold Strategist at State Street Global Advisors. "This suggests that a growing majority of advisors are using gold as a core asset for long-term investment horizons, which is where it shines in the context of a well-balanced, diversified portfolio."
Across all North American financial advisors, nearly 9 in 10 (87%) advisors currently allocate assets to gold. Among those with gold exposure in client accounts:
- 32% have less than 1% of total client assets under management allocated to gold;
- 56% have between 1% and 4.9% of assets allocated to gold; and
- 13% have 5% or more of assets allocated to gold.
The vehicle of choice for allocating assets to gold is physically backed gold ETFs, which on average account for 40% of advisors current investments in gold, followed by gold mining ETFs (16%), gold mutual funds (16%), and index or multi-asset funds that include gold or gold-mining stocks (16%).
"The recent gold price rallies have piqued investor interest, and with good reason amidst today's economic and geopolitical uncertainty," said Joseph Cavatoni, senior market strategist at the World Gold Council. "Many investors and advisors alike used to look at specific factors, like interest rates and the dollar, in isolation when considering an allocation to gold. But as a global asset with a multitude of both strategic and tactical drivers that are supporting demand, a strong case can be made for gold in the year ahead."
The top three reasons cited by financial advisors for investing in gold or increasing exposure to the precious metal include:
- Gold is a proven diversifier, especially in periods of financial turmoil and economic uncertainty (48%)
- Gold has stood the test of time as a safe and proven store of value (36%)
- Our clients express a desire to invest in gold (35%)
Conversely, the most frequently cited barriers that hinder investment into gold include:
- Gold does not pay coupons or dividends (54%)
- Gold's intrinsic value is difficult to calculate due to a lack of an established model (28%)
- Gold is viewed as a speculative investment (26%)
About the Gold Perceptions Survey
State Street Global Advisors and the World Gold Council conducted a survey of 400 financial advisors in North America with $100 million or more in total assets during the Fourth Quarter of 2023. Respondents were evenly split between wirehouses, Independent Broker-Dealers, and Registered Investment Advisors.
About World Gold Council
We are a membership organisation that champions the role gold plays as a strategic asset, shaping the future of a responsible and accessible gold supply chain. Our team of experts builds understanding of the use case and possibilities of gold through trusted research, analysis, commentary, and insights. We drive industry progress, shaping policy and setting the standards for a perpetual and sustainable gold market.
You can follow the World Gold Council on X (Twitter) at @goldcouncil and LinkedIn.
About State Street Global Advisors
For four decades, State Street Global Advisors has served the world's governments, institutions and financial advisors. With a rigorous, risk-aware approach built on research, analysis and market-tested experience, we build from a breadth of index and active strategies to create cost-effective solutions. As pioneers in index and ETF investing, we are always inventing new ways to invest. As a result, we have become the world's fourth-largest asset manager* with US $4.34 trillion† under our care.
*Pensions & Investments Research Center, as of 12/31/22.
†This figure is presented as of March 31, 2024 and includes ETF AUM of US $1,360.89 billion USD of which approximately US $65.87 billion USD is in gold assets with respect to SPDR products for which State Street Global Advisors Funds Distributors, LLC (SSGA FD) acts solely as the marketing agent. SSGA FD and State Street Global Advisors are affiliated. Please note all AUM is unaudited.
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