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A crop of durable diversifiers

Diversifying across different safe haven assets means you are not over exposed to problems in any one area
A crop of durable diversifiers
  • Solid diversifiers have been hard to find in the recent sell-off but a few funds have held up well
  • It makes sense to diversify across different safe-haven assets as no single one is a reliable bet
  • Property has held up well amid rising inflation

With government bonds struggling alongside equities, solid diversifiers have started to look like gold dust in recent months. Not all defensive assets have lived up to their reputation as the storm clouds have gathered. Take the wealth preservation trusts, a group which includes both the outperforming Ruffer Investment Company (RICA) and RIT Capital Partners (RCP) whose shares have fallen harder than even the MSCI World index recently (see Which defensive funds are working? IC, 04.03.22). Or, as the IC’s Alex Hamer pointed out, the relatively middling performance of physical gold so far this year is another example (Gold: Stuck in the middle with Au, IC, 20.05.22).

That’s arguably a reminder to diversify across different safe-haven assets, mindful that their idiosyncrasies can produce markedly different bouts of performance when a crisis comes. But it’s also worth considering what has worked in the most recent bout of volatility and whether the most recent winners have done quite so well in previous sell-offs. To assess this, we have looked at recent strong performers, gauging how they fared in the pandemic sell-off in early 2020 and the sell-off in the closing quarter of 2018.

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