Gold has become the best performing asset class over one, three and 10 years as a result of the current commodity boom.
In dollar terms, gold has returned 38.9% over the year to February – ahead of gilts (5.8%) and cash (3.1%). The Tokyo Stock Price Index, or Topix, has fallen 22.9% in the period, with UK commercial property down 9.2% and the Euro Stoxx 8.1% lower.
Over three years, gold is up 29.7%, ahead of the strong German Dax (15.8%) and the FTSE 250 (14.3%).
While gilts and cash have done well recently, they are bottom of the list over three years, returning 5% and 2.8% respectively.
The FTSE 250 is the best performing asset class over five years, returning 23.3%. The Dax is next best up 21.5% and gold delivered 21%.
Gold is back on top over 10 years (12%), ahead of UK house prices (10.9%) and UK commercial property (10.8%). Cash was up just 3% in the period, ahead of the Topix with 0.3%.
Over 15 years the FTSE 250 has climbed 11.7%, ahead of UK commercial property and Euro Stoxx, up 11.3% and 10.6% respectively. The Topix is down 0.6% in the period.
Norwich Union senior economist Stewart Robertson says gold is not the only commodity to soar over the last year.
“Over the past 12 months the best performing asset class has been gold, the price of which has risen by nearly 40% from $670 to more than $900,” he says.
“Other metals and agricultural products have also seen rapid price rises. Part of the explanation could be speculation; part is higher demand from developing nations; but part is surely a reflection of worries over competing financial assets.”
Norwich Union fund development manager James Dalby says the analysis shows just how different performance of various asset classes can be.
“We know that the market turmoil we have been witnessing in recent times has sensitised most investors to the risks associated with share-based investments,” he says.
“However, we also know that over the long-term such investments do have good potential for growth. The two golden rules for investors are to take a long-term view and to maintain a diversified portfolio at all times."
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