What are safe-haven assets and should you invest in them?

Investors often look to safe-haven assets like gold in times of market turmoil, but do they live up to the name?

Gold bullion leaning on a stack of gold ingots.
(Image credit: Getty Images - Dragon Claws)

The market response to the conflict in the Middle East has been relatively muted so far, with investors taking a “wait-and-see” approach. Despite this, there is a sense that geopolitical risks could be building again, which could prompt renewed interest in safe-haven assets.

The scale of the conflict between Israel and Iran has broadened in recent days, with the US becoming directly involved after ordering a missile attack on Iranian nuclear facilities over the weekend. A ceasefire has since been negotiated but looks precarious.

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Global equities versus safe havens

Asset

£10,000 invested over 10 years – nominal

£10,000 invested over 10 years – inflation-adjusted

Global index tracker

£32,510

£24,000

Gold ETF

£26,119

£19,283

60/40 strategy

£18,477

£13,641

Absolute return funds

£12,700

£9,376

Cash ISA

£11,423

£8,433

UK gilts

£9,504

£7,017

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Equities are more volatile in the short term

Safe haven

Maximum loss (peak to trough)

Cash ISA

0%

Absolute return funds

-8.5%

60/40 Strategy

-17.8%

Gold ETF

-22.4%

UK gilts

-36.8%

Comparator: Global index tracker

-26.2%

Katie Williams
Staff Writer

Katie has a background in investment writing and is interested in everything to do with personal finance, politics, and investing. She enjoys translating complex topics into easy-to-understand stories to help people make the most of their money.

Katie believes investing shouldn’t be complicated, and that demystifying it can help normal people improve their lives.

Before joining the MoneyWeek team, Katie worked as an investment writer at Invesco, a global asset management firm. She joined the company as a graduate in 2019. While there, she wrote about the global economy, bond markets, alternative investments and UK equities.

Katie loves writing and studied English at the University of Cambridge. Outside of work, she enjoys going to the theatre, reading novels, travelling and trying new restaurants with friends.