With gold prices at considerably higher levels than a couple of years ago, some fund managers are reconsidering their position, reports S&P Fund Services.Fund managers including those at Barings and LGT have reduced holdings, while Union Investment considered investing but felt the recent gold price rise is not supported by the fundamentals. Legal & General's asset allocation team also remain out of gold as they consider it could be the next bubble.
ETF Securities reported that its ETFS Physical Gold exchange-traded commodities (ETCs) experienced their largest outflows in nine months with outflows in late July totalling $285m over the space of a week.
GEM funds outstrip wider markets
Funds in the Investment Management Association's (IMA) global emerging markets sector increased nearly 60 per cent in value, in contrast to an average 25 per cent increase across worldwide stock markets, reports research company Defaqto. "The expectations of many economic commentators are that emerging markets will, over the longer term, continue to grow more rapidly than developed ones," said Fraser Donaldson, fund analyst at Defaqto. "As developed markets continue to struggle out of the global recession, we expect interest in emerging markets to grow."
Meanwhile a survey by asset manager F&C found that three quarters of respondents expect the best returns over the next year to come from companies outside the UK.
HSBC launches inflation-linked bond fund
HSBC Global Asset Management has launched a Global Inflation Linked Bond fund which invests in sovereign inflation-linked bonds issued by Organisation of Economic Co-operation and Development (OECD) countries such as Australia, Canada, Sweden, the UK, US, Japan and major Eurozone countries.
HSBC believes that current economic uncertainties, and accommodating monetary policies combined with significant public deficits in developed economies, may lead to higher realised inflation in the next three to five years. "Inflation-linked bonds provide the most effective hedge against inflation when compared to other asset classes, including real estate and commodities, as they are the only asset class whose return is directly adjusted to the realised rate of inflation," said Jean-Charles Bertrand, manager of the new fund.
The minimum investment for the fund, which is domiciled in Luxembourg, is $5000.