The principal factors behind this growth include: It is increasingly recognised as a mainstream investment as global investment demand has grown by an average of 14% per year since 2001 and the gold price has increased by almost six-fold over the same period. Gold allocations have been recipients of this shift. The share of non-traditional assets among global pension funds increased from 7% in 1998 to 26% in 2018 – this is 30% in the US 2 ( Chart 1). Institutional investors have embraced alternatives to traditional stocks and bonds in pursuit of diversification and higher risk-adjusted returns.

We believe that gold is not only a useful long-term strategic component for portfolios, but one that is increasingly relevant in the current environment. Continued financial market uncertainty ranging from geopolitical tensions, to expectations of diverging global economic growth and an increase in asset volatility.

Low interest rates, which may push investors to seek riskier assets at elevated valuation levels and, for US pension funds in particular, may increase the value of liabilities, possibly reducing their funding ratio.

As the new decade begins, investors face an expanding list of challenges around asset management and portfolio construction. Among these:

High tor asset management