Investors have been thrown into a vortex of uncertainties since we started the year of the Metal Rat. There was barely any time to rejoice from the achievement of finally signing the US-China phase 1 trade deal when news of the Coronavirus outbreak hit us.

Without a vaccine in place, China put a lock-down on its city of Wuhan in its attempt to contain the virus from spreading across the country. This led to a disruption in the world’s largest human migration. The Chinese New Year period typically see 3-billion journeys taking place as the Chinese community travel home to reunite with family members ahead of the festive season.

While equity markets have been see-sawing in recent weeks, you probably didn’t notice Gold price has been creeping up on you, did you? The price of Gold has steadily climbed higher as the brave hearted took their bets on the equity market, while the more cautious laid low and held on to their Gold while waiting for more stability.

 

Gold Leads the Race This Year

With tech stocks rallying, there has been a lot of talk about the S&P 500 hitting new highs in the last few weeks. The impressive earning results have pushed some of the technology names to record highs. But fears surrounding the spread of the coronavirus outbreak has put pressure on risk assets, leaving global financial markets in a sea of red. 

In contrary, the boring precious metal, Gold, has seen its price steadily rise. While confidence level did improve after the phase 1 signing between the US and China, many were still sceptical on their longer-term view for global markets. With central banks, and the more cautious investors increasing their allocation into Gold, little stood in the way of its price rising further – overtaking the rest of the major indices YTD up till 28 February 2020. 

 

Chart 1: Year-to-Date Returns of Major Indices (as at 28 February 2020, in MYR terms)

Source: Bloomberg as at 28 February 2020. All returns are quoted in MYR terms.

 

What's Next?

With the virus outbreak seen spreading wider across the globe, volatility will likely continue in the near term for global financial markets. US treasury yields have already hit an all time low, while Gold price is seen climbing higher after already breaching the 6-year high. Some analysts are forecasting the precious metal to climb above the USD1,900 per ounce level, a further 15% move upwards from now. 

So is it time to bottom fish, or stay in safe haven assets? Whatever the decision is, we believe that portfolio diversification is vital.  With the rule of thumb being 5% - 10% of a portfolio allocation in Gold, one may want to consider tilting their portfolio to have a higher allocation into Gold under the current environment.

 

What's the Quickest Way to Gain Allocation?

Shifting of allocations in your portfolio would generally need to be done efficiently and effectively. So gaining exposure through physical Gold bars would not be preferable, given the liquidating the bars would be a hassle. 

Here lies the beauty of ETFs, which can provide investors a quick and easy access to an index. The TradePlus Shariah Gold Tracker is Malaysia’s 1st and only Shariah-compliant physically-backed Gold exchange traded fund. Traded on the Main Market of Bursa under the code 0828EA, the ETF tracks the LBMA Gold Price and currently trades at a range of RM2.20 – RM2.30 per unit, with each unit providing an exposure of approximately 0.01 gram of gold.

Want to learn more? Head over to our website at https://tradeplus.com.my/gold-tracker for more information. Alternatively, you may WhatsApp us at 012-250.8002 for more information, or to even schedule a session with our ETF specialist if you’re in the Klang Valley.

 


Disclaimer: This article has been prepared by Affin Hwang Asset Management Berhad (hereinafter referred to as “Affin Hwang AM”) specific for its use, a specific target audience, and for discussion purposes only. All information contained within this presentation belongs to Affin Hwang AM and may not be copied, distributed or otherwise disseminated in whole or in part without written consent of Affin Hwang AM. The information contained in this presentation may include, but is not limited to opinions, analysis, forecasts, projections and expectations (collectively referred to as “Opinions”). Such information has been obtained from various sources including those in the public domain, are merely expressions of belief. Although this presentation has been prepared on the basis of information and/or Opinions that are believed to be correct at the time the presentation was prepared, Affin Hwang AM makes no expressed or implied warranty as to the accuracy and completeness of any such information and/or Opinions. As with any forms of financial products, the financial product mentioned herein (if any) carries with it various risks. Although attempts have been made to disclose all possible risks involved, the financial product may still be subject to inherent risk that may arise beyond our reasonable contemplation. The financial product may be wholly unsuited for you, if you are adverse to the risk arising out of and/or in connection with the financial product. Affin Hwang AM is not acting as an advisor or agent to any person to whom this presentation is directed. Such persons must make their own independent assessments of the contents of this presentation, should not treat such content as advice relating to legal, accounting, taxation or investment matters and should consult their own advisers. Affin Hwang AM and its affiliates may act as a principal and agent in any transaction contemplated by this presentation, or any other transaction connected with any such transaction, and may as a result earn brokerage, commission or other income. Nothing in this presentation is intended to be, or should be construed as an offer to buy or sell, or invitation to subscribe for, any securities. Neither Affin Hwang AM nor any of its directors, employees or representatives are to have any liability (including liability to any person by reason of negligence or negligent misstatement) from any statement, opinion, information or matter (expressed or implied) arising out of, contained in or derived from or any omission from this presentation, except liability under statute that cannot be excluded.

Warning Statement: A Prospectus is available for the TradePlus Shariah Gold Tracker and investors have the right to request a copy of it. Investors are advised to read and understand the contents of the Prospectus dated 28 November 2017 and Supplementary Prospectus dated 2 July 2019 before investing. The Prospectus / Supplementary Prospectus have been registered with the Securities Commission Malaysia, who takes no responsibility for its contents. An electronic copy of the Prospectus / Supplementary Prospectus can be obtained at Affin Hwang Asset Management Berhad’s website www.tradeplus.com.my. As with any forms of financial products, the financial products mentioned herein carries with them various risks. Investors are advised to consider the general and specific risks involved as stipulated in its Prospectus / Supplementary Prospectus before investing. There are also fees and charges involved when investing in these funds, and investors are advised to consider the fees and charges carefully before investing. The price of units and distribution payable, if any, may go down as well as up and past performance of the funds should not be taken as indicative of their future performance. 

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