Shelter from the storm: Hunting "non-correlated" assets

Hedging against a market downturn has got harder than ever...but there are avenues to explore.

Summary: Negative correlating assets like bonds do a better job dampening out share volatility than cash and so better support long term returns. Negative correlating gold and low correlating commodities appeal but are a drag on returns. Property despite its many issues may be your best complementary low correlating asset. Hedge funds including “CTA” funds may do so also, but realise they are driving a lot of the volatility you are trying to dilute.

Key take out: Portfolios should hold assets that zag when shares zig as well as those that do neither.  

Key beneficiaries: General investors. Category: Shares.


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