During the same month which the group passed the £1bn barrier in assets under management, it added a 1% position in the $223m offshore fund, breaking with its traditional 2% minimum holding.
The change means that its Oeic range now holds 3% in the yellow metal, with the other 2% held in an exchange traded commodity, the iShares Physical Gold ETC. A 1% position in Naylor-Leyland’s fund will also be added to the Iboss PMS, when it rebalances at the start of next month.
Explaining the addition, Chris Metcalfe, investment and managing director, said: “We looked at this fund approximately 12 months ago and by not holding it over the intervening period, we have been saved from 6% of negative returns and a whole heap of volatility.
“But after a protracted period of hand-wringing, manager meetings, data crunching and lively discussions between ourselves and with our advisers, we have brought it in.”
Metcalfe added that Iboss may look to increase the holding in the future, but that will depend on the economic backdrop, visibility of systemic risk and relative performance.
“Historically, our position on gold has been closer to that of the gold bears,” said Metcalfe. “We remained of the opinion for some time that a small, circa 2%, holding in gold would do little to protect a portfolio from a catastrophic event, even if it were to outperform other asset classes considerably.
“We have also argued that should a real doomsday scenario occur, it wouldn’t really matter if you held a gold brick or a government bond, it’s unlikely to help you when there’s fighting on the streets. AK47s and tinned food would be potentially the better defensive assets.”
However, Metcalfe said that circumstances have since changed, and as investors they have changed with them.
“We remain increasingly unnerved by the actions and increasing power of central banks, as well as the potential to cause market panic by their actions,” he said. “We feel it is more prudent than ever to build in defensive and, where possible, non-correlated assets to all our investments.
“As ever we will try to avoid markets which are overpriced relative to history and this is merely another step in the same direction. The average US retail investor is feeling more bullish than any time since 2007 and that anecdotal evidence reflects much of the euphoria in current markets. We don’t really do euphoria and even if we did, this is not the time for it.”
