“With uncorrelated assets, we do not expect them to be correlated with other growth assets,” he states. “In that space we might put commodities such as gold, infrastructure, certain trading strategies and insurance strategies.
“However, that list can change, as the level of correlation can change over time. It can, in actual fact, be difficult to find truly uncorrelated assets at some points in the cycle.”
This has certainly proved to be the case with commodities and, in particular, gold, which has traditionally been seen as a good defensive asset class with low levels of correlation to equities. It has, however, fallen out of favour with some multi-managers as its characteristics have changed over recent years.
As Mr Parry explains: “Gold was a very interesting asset to us at the time of the financial crisis, not as a safe haven, but because of its low correlation with risky assets. Post-crisis, it became more correlated and was, in fact, a proxy for the equity markets. That correlation has lessened now, but they are still more highly correlated than they have been in the past, which is why we only have a modest holding.”
Laura Mossman is a freelance journalist
Spending structural investment spending
£3bn - The increase in infrastructure capital spending plans per year in 2015 to 2016, announced by the chancellor in the 2013 Budget
July 2013 - The month by which the government will produce technical planning guidance relating to shale gas
13% - The approximate increase in the average annual UK infrastructure investment between 2005 and 2010 and 2010 and 2012
£8.5bn - Average spend per year on energy infrastructure in 2011 and 2012
£13.7bn - Average spend per year on transport infrastructure in 2011 and 2012
£310bn - Amount of infrastructure investment planned from 2012 to 2015 and beyond
Source: HM Treasury
