The popularity of the yellow metal is based on the capacity for production of jewellery and coins as well as broad industrial usage. In addition, due to its unique value, anchored in its rarity, Gold has always been recognized as a global currency. That is why the International Monetary Fund (IMF) and many central banks around the globe hold Gold in their reserves.
Investors have long seen Gold as a safe haven asset, particularly in times of financial market uncertainty and periods of economic stress. The yellow metal may be seen as valuable insurance against the persistent risks of greater equity market volatility, rising inflation, or recurrent geopolitical tensions.
Gold is an attractive real asset because adding it to investors' portfolios which are primarily invested in equities and bonds, brings in more diversification and can help to mitigate downside risks. In fact, adding gold to an equity-oriented portfolio has improved its risk adjusted returns 75% of the time over the last 27 years.1
Should you invest directly or indirectly?
Investors can invest directly in physical Gold in the form of coins or bars which can be stored in bank safe deposit boxes or of course kept at one's home.
Alternatively, investors can invest indirectly in Gold with physically backed Exchange Traded Products (ETPs) offering a balanced blend of simplicity, convenience, security and cost-effectiveness. ETPs can be traded throughout the day on exchanges just like stocks and held safely in their securities account.
Exchange Traded Funds (ETFs) offer investors the highest level of security as compared to the option of investing in other types of ETPs. ETFs are fully backed by actual Gold deposits. From a legal perspective, the fund structure ringfences the Gold from the issuing financial institution for the benefit of the ETF's shareholders. Exchange Traded Commodities (ETCs) in contrast are like certificates debt instruments that can bear potential default issuer risk.
Safety-oriented investors will prefer ETFs exclusively invested in physical Gold following the London Bullion Market Association (LBMA) specific requirements in terms of minimum quality standards. Moreover, investors should consider that the Gold is lodged with reputable custodian banks in Switzerland. Gold ETF offers investors the right to redeem the Gold in-kind in all trading units between 1 gramm and 12.5 kilograms.
With UBS Gold ETFs you can efficiently access the benefits of Gold.
Discover our indexing solutions
This content is for professional clients only. It is not to be distributed to or relied upon by Retail Clients under any circumstances.
Views and opinions expressed are presented for informational purposes only and are a reflection of UBS Asset Management’s best judgment at the time a report or other content was compiled. UBS specifically prohibits the redistribution or reproduction of this material in whole or in part without the prior written permission of UBS and UBS accepts no liability whatsoever for the actions of third parties in this respect. The information and opinions contained in the content of this webpage have been compiled or arrived at based upon information obtained from sources believed to be reliable and in good faith but no responsibility is accepted for any errors or omissions. All such information and opinions are subject to change without notice but any obligation to update or alter forward-looking statement as a result of new information, future events, or otherwise is disclaimed. Source for all data/charts, if not stated otherwise: UBS Asset Management.
Any market or investment views expressed are not intended to be investment research. Materials have not been prepared to address requirements designed to promote the independence of investment research and are not subject to any prohibition on dealing ahead of the dissemination of investment research. The information contained in this webpage does not constitute a distribution, nor should it be considered a recommendation to purchase or sell any particular security or fund. The materials and content provided will not constitute investment advice and should not be relied upon as the basis for investment decisions. As individual situations may differ, clients should seek independent professional tax, legal, accounting or other specialist advisors as to the legal and tax implication of investing. Plan fiduciaries should determine whether an investment program is prudent in light of a plan's own circumstances and overall portfolio. A number of the comments in the content of this webpage are considered forward-looking statements. Actual future results, however, may vary materially. Past performance is no guarantee of future results. Potential for profit is accompanied by possibility of loss.
© UBS 2021 The key symbol and UBS are among the registered and unregistered trademarks of UBS.