22nd April 2015
UK investors are avoiding gold this year and focusing on other assets despite the sharp drop in the price of the precious metal over the last two years, a survey by Legg Mason Global Asset Management has found.
Revealing the extent to which investors have lost faith following a 12-year bull market, the survey reveals the average investor in the UK had just 2% of their portfolio in gold at the turn of the year.
This makes it one of the most unloved assets in the UK, despite the current price of $1,200 an ounce leaving it more than a third below its peak in 2011, when it traded above $1,900.
However, the situation does not look set to change drastically this year, with just 16% of UK investors planning to increase their exposure, significantly below the average globally where more than one in four (27%) expects to boost their gold holdings.
UK investors are instead focused on a variety of other asset classes. Equities remain the favourite choice, with 29% intending to increase their exposure following a move to near-record valuations for many stock markets around the globe, while a further 25% are more cautious and favouring cash.
Fixed income and property are also more popular than gold among investors, with 22% and 17% of respondents planning to increase their exposure to the two asset classes respectively.
Adam Gent, head of UK retail sales at Legg Mason Global Asset Management, says: “Gold has had a torrid time of it over the last two years, with investors more confident about the global economy and less in need of a safe haven that is typically viewed as an inflation hedge.
“The strengthening US dollar, pledges by governments to support growth, and soaring equity markets have all worked against the precious metal. The world has moved on from the global financial crisis when gold was in its ascendency, and barring an unforeseen shock to markets it seems unlikely it will be pushing back towards previous highs in 2015. Instead, we believe 2015 may be similar to last year, with a hunt for yield supporting asset prices across equity and fixed income markets.”