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Tilney halves gold exposure in its fund range


Investment management group Tilney has halved its exposure to physical gold in favour of short-dated US Treasury Inflation-Protected Securities (TIPS) across its central strategies.  

This includes its flagship Multi-Asset Portfolio (MAP) fund range which holds over GBP1.67 billion of assets for both clients of intermediaries and direct investors.
Ben Seager-Scott, Chief Investment Strategist at Tilney, says: “The gold trade, which we initiated at the end of 2015, has served portfolios well, especially as we moved through a period where markets have been driven more by liquidity than fundamentals. With the investment landscape changing, it seems appropriate to review these positions, and begin taking profits. The gold positions effectively substituted for distorted fixed income markets which are now close to normalising in the US.”
“US Treasuries appear to have regained the characteristic of a key risk-off trade. Additionally, normalising interest rates in the US increases the opportunity cost of holding gold as a non-yielding asset. With gold having done its job, now we can start returning to a more traditional footing. In place of gold, we have increased our positions in short-dated US TIPS, which we believe will still offer some portfolio protection during risk-off periods. In the meantime, we anticipate a decent real return from the carry, and with breakevens close to the 2 per cent target, the potential for protection against upside inflation risk is attractive.”

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