Strategic asset allocation in a high-inflation world
Family offices continue to leverage their agility, alternative assets, and diversified strategies, including gold, to navigate economic volatility and secure sustainable returns.
In today's dynamic financial landscape, family offices wield a unique advantage. With cash reserves and patient capital readily available, they possess the agility to respond to market shifts and seize opportunistic deals, setting them apart from traditional institutions. As the world grapples with challenges, family offices are honing their focus on asset allocation and risk management.
In the face of global geopolitical and economic volatility, traditional investment avenues pose challenges. Consequently, family offices are increasingly turning towards alternative assets such as private equity, real estate, private debt, and derivatives, seeking avenues for sustainable returns. These investments offer diversification and the potential for returns uncorrelated to equities, which is crucial for navigating turbulent market conditions.
The evolving role of family offices as a significant force in financial markets is driven by the intergenerational transfer of wealth. Victor Smorgon Partners recognises this paradigm shift and offers co-investment opportunities tailored to the unique needs of family offices. For example, our Global Multi-Strategy Fund (GMF) offers diversification and agility to respond swiftly to market dynamics assuming inflation will remain higher for longer due to increased labour, materials, and energy costs globally.
In addition, in times of uncertainty, gold remains a stalwart in investment portfolios. Victor Smorgon Partners recently hosted a webinar for our investors featuring John Read from the World Gold Council, who reaffirmed gold's resilience as a safe-haven asset. His insights underscore the enduring appeal of gold as a hedge against volatility, providing stability and preservation of capital amidst market fluctuations. Gold in US dollars has performed remarkably well in 2024, rising by about 15 per cent year to date and outpacing most major asset classes. The big question on investors’ minds is whether the gold price can continue to appreciate. Our view is that there is potential for significantly more price appreciation, given the strong fundamentals driving the gold price, and a 5 to 10 per cent allocation of gold in a diversified portfolio of assets will provide superior risk-adjusted returns with lower volatility over time. Reflecting this belief, our flagship fund, the Global Multi-Strategy Fund, has a ~15% allocation to gold through investing in gold mining equities. As a perceived safe-haven asset and stable store of value, gold tends to outperform during periods of higher inflation and lower economic growth.
Victor Smorgon Partners, the Group’s privately owned Family Office investment vehicle, not only invests on behalf of the family of the Victor Smorgon Group, but for those wishing to access the same compelling opportunities to build their own generational wealth. To learn more, visit www.victorsmorgongroup.com.au/invest-with-us