Can you hedge against ‘human stupidity’?

Peter ShaeshaftSenior Portfolio Manager at Justin Urquhart Stewart’s Seven Investment Management, Peter Sleep, is quoted in the FT Adviser this week as saying that gold does have a role in portfolios as a hedge against ‘human stupidity’!

Gold BarsHis argument for this is that gold does hold “its value in times of severe turbulence such as war or geopolitical upheaval”. In Sleep’s view there are enough “stupid events” going on in the world right now for the threat of such upheaval to feel very real.

Adrian Lowcock, Investment Director at Architas states that he would typically “suggest investors hold around 5 per cent of gold in their portfolios as a long term diversifier.”

We would of course point to fine wine’s comparative performance to gold as a stable, portfolio diversifier with a proven track record of investor returns that outstrip gold over the long term. Liv-ex has just published its latest market data comparing fine wine with gold and financial markets, as can be seen in the table below.

Index YTD 1Yr (%) 5Yr (%)
Gold 2.6 -8.3 -10.3
Liv-ex Fine Wine 50 4.5 5.6 17.8
Liv-ex Fine Wine 100 3.9 6.0 19.6
Liv-ex Bordeaux 500 6.1 7.6 27.2
Liv-ex Fine Wine 1000 8.2 10.5 33.1
FTSE 100 4.9 7.8 29.6
S&P 500 15.0 21.1 82.4

Source: 31st October 2017

Gold is treated as a mainstream portfolio diversifier but it is considerably more volatile than fine wine and does not have the ‘liquid’ asset’s track record of growth and returns to investors over the long term. Fine wine’s historic performance validates its value as an important alternative asset to be used in portfolio planning. For more information call us on 0203 384 2262 or visit our website .