Use Gold To Optimise Portfolio

Returns from gold are expected to be decent going forward, but more importantly, it acts as a portfolio diversifier and helps reduce volatility

- BY JOYDEEP SEN, Corporate Trainer and Author

When we think of investments, the first thing that intuitively comes to our mind is the expected returns. But there is another important aspect that we should consider: diversification. Its benefit lies in the negative correlation between various investment assets. The negative correlation is not a perfect 100 per cent, but even to a lesser extent, negative correlation leads to portfolio diversification. Simply put, in a given market condition, various investment assets behave differently. So, the volatility in your portfolio is reduced to the extent certain components move differently than the others.

In the current context, gold is expected to yield decent returns over the medium to long-term period. Historically, gold has proven to be a good portfolio diversifier, by helping reduce the overall portfolio volatility. Let’s explore why gold is expected to yield better returns and how it can help diversify your portfolio and mitigate risks.

Gold As A Diversifier