Protect your portfolio from post-election economic uncertainty
In the wake of one of the most controversial presidential elections that United States has ever experienced, investors have pushed the S&P 500 Index of equities to its lowest point since 1980. In contrast, less risky tangible assets, such as Bullion futures in New York, have risen for four consecutive weeks. Both candidates advocate economic reforms that have cast a great cloud of doubt surrounding the United States and global economy. Bloomberg published an article on November 7, 2016 “Hedge Funds Are Hiding Out In Gold,” which explains the dramatic inflow of gold investments in the last few weeks. This is for two reasons. One, victory for either Trump or Hilary means inevitable economic uncertainty. Chad Morganlander, a money manager at Stifel, Nicolaus & Co., which oversees about $172 billion, told Bloomberg: “Investors are squaring their books going into elections to make sure they’re hedging their risk. When you have more volatility within the financial system, then investors gravitate towards safe haven asset classes.”
The second catalyst for the gold boom stems from comments last week made by the Federal Reserve that indicated an 82% chance for an interest rate increase to occur this December. But is gold the best safe haven asset in times of rising inflation?
The Bloomberg article highlights the $309.1 million of inflows SPDR Gold Shares received just last week. However, these inflows are set against a five year trend of under performance from the gold market; something that reactionary investors have seemingly cast a blind eye to. Since its peak in September 2011, SPDR Gold Trust (GLD:US) has actually declined by over 30%, which means this rally in gold surely will not last.
From Bloomberg:
“Still, traders should brace for the unexpected, Morganlander of Stifel said. The CBOE Volatility Index, the measure of market turbulence known as the VIX, climbed for a ninth day Friday, the longest streak since the data starts in 1990. The CBOE Gold ETF Volatility Index, which measures swings for bullion, reached the highest since July. ‘Investors should put their seat belts on because there will be a tremendous amount of volatility, regardless of who gets elected,’ Morganlander said.”
Instead of turning to the weakening gold market, investors should stock up on growing alternative asset classes to hedge risk. According to Blackrock, “alternative assets tend to behave differently than stocks and bonds, adding them to your portfolio can offer scope for broader diversification and the potential to reduce risk and enhance returns.” This is why seasoned investors have increasingly been turning to art assets as a store of wealth. Moreover, the art asset class acts independently of the S&P 500, recovers faster than traditional investments after times of crisis, and preforms positively against high and rising inflation. These characteristics make the art market the safe haven investment, especially considering the issues that are expected to hit the U.S economy this month.
You need access to find the right opportunities, so investment funds are the perfect entry-way to begin making art investments that will protect your portfolio against rising inflation and the post-election economic uncertainty. Arthena investment funds expose investors to the benefits of the art market with affordable minimum buy-ins. Request white pages for Arthena funds here.
