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Buy gold now to hedge out inflation and currency risk

Jupiter Merlin’s fund of funds head does not see a gold bubble forming over the mid term and believes the asset class offers great insurance against inflation and currency risks

 
Buy gold now to hedge out inflation and currency risk

Jupiter Merlin’s fund of funds head John Chatfeild Roberts has been continuing to build his exposure to gold across his fund of funds range on a view that price rises in the sector over the past two years have not yet peaked.

Chatfeild Roberts (pictured) told Citywire that exposure to the asset class now comprised between 5% and 7% across the Jupiter Merlin fund of funds portfolios he manages with Peter Lawery and Algy Smith-Maxwell, with the team recently increasing exposure to BlackRock Gold & General, as well as buying into a gold ETF (exchange traded fund) tracker.

He said: ‘The gold price has stayed at a similar level but gold shares have come back up a little.

‘The advent of ETFs has made owning gold a lot easier. You used to have to buy the shares but now a lot of demand is being directed to the metal itself.’

Despite believing that there has been a huge surge in demand over the past two years, Chatfeild Roberts said he did not believe an asset bubble was developing in gold, at least over the next two years.

‘It does not seem like a bubble. Gold has not peaked out and is insurance partly on the currency. In an uncertain world, a bit of insurance is no bad thing,’ he said.

Chatfeild Roberts has also been building his cash positions over the past few months, on a view that wealth preservation has become all-important as his concerns over the continuing onerous levels of debt in the global economy remain.

‘This is not a market to get excited about. It is a difficult time to invest and you have to make sure you preserve people’s wealth. The central banks are forcing people to take on risk and you have to worry about returns on assets,’ he said.

‘People should remain very concerned about returns on their assets; if you have £10,000 in an account you have to keep a very careful eye on inflation and currency. This is an environment where a huge amount of wealth has been destroyed.’

Chatfeild Roberts has also been buying into the Thames River Global Bond GBP Dist fund run by  Paul Thursby and  Peter Geikie-Cobb on his view that sterling faces further pressure.

He admitted that having relatively low exposure to sterling last year had hurt performance but had had a beneficial effect so far this year. ‘Global bond funds have to have very good currency managers because they have to get the duration right and predict when currencies will widen.

‘This pair is very experienced and the majority of bond returns come from getting the currency calls right.’

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2 comments so far. Why not have your say?

Cape

Mar 09, 2010 at 07:09

By quoting performance on the fund manager, this article gives the reader some confidence that it is not wholly dedicated to the interests of the chosen funds.

So a continuing move to objectivity will secure additional readers and work on the confidence of existing readers.

This is good for readers, never mind the ethics of journalism and the credibility of CityWire and its authors.

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Cape

Mar 09, 2010 at 07:10

There is quite a lot of evidence to support the theory that governments keep a lid on the price of gold.

What do fund managers think of this argument? After all, it is about market manipulation and so would make investors wary.

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