By Jordan Eliseo
Chief Economist, ABC Bullion
At ABC Bullion, we are very passionate about profiling gold as an investment and as an asset class in its own right. A particularly savvy method to invest in physical gold (and one of my preferred styles of investing) is through a permanent portfolio.
A permanent portfolio is one that contains a standard 25 per cent allocation to physical gold, alongside similar allocations to traditional investment assets like shares, bonds and cash.
Cor Capital is the only Australian managed fund to adopt this investment approach. I was pleased to see that the fund was recently given a positive “investment grade” rating by fund rating house Atchison Consultants.
Atchison Consultants rated Cor Capital as a low risk, stable investment fund noting it had no derivatives or gearing within the portfolio. Atchison also commented on the fund’s long term returns and its high correlation to the AUD gold price.
In relation to a peer group of ‘balanced funds’, the Cor Capital fund displayed the following characteristics:
- It had outperformed its peer group over ten and fifteen year periods;
- The volatility of the fund over the longer term was considerably lower than the peer group; and
- Over 20 years to 31 May 2015, the maximum drawdown of the Fund has been 5.0% which is significantly lower than the peer group’s maximum drawdown of 27.7%.
In a nutshell, the permanent portfolio investment approach delivers higher returns and a lot less risk, which is exactly what investors should be looking for.
Physical gold protects against inflation or the threat of inflation which makes it a strong investment option. It is the 25 per cent allocation to physical gold which allows Cor Capital to deliver a stable and superior fund.
Whether it’s direct physical ownership throughs bars and coins, gold mining stocks, managed funds with healthy allocations to physical gold, or a combination of the above, maintaining a core exposure to physical bullion will remain an important way to protect and build wealth in the years ahead.
Anyone wanting to find out more about the Cor Capital fund can do so by checking out their website here.