In order to balance the appeal of precious metals with stocks and other asset classes, investors—particularly high-net-worth individuals—are readjusting their allocations.
Given that gold and silver have produced impressive gains over the previous year, investors’ enduring propensity to pursue performance is once again in the spotlight. Top private bankers emphasized that while precious metals continue to be an important hedge in client portfolios, the recent steep rises call for prudence in an interview with N Mahalakshmi for The Wealth Formula’s Diwali Blockbuster roundtable.
Anand Rathi Wealth’s joint CEO, Feroz Azeez, described the behavioral factors influencing investment choices. Recency bias will dominate the majority of the decision-making process. “The majority of people will be selling an asset when they should be buying it,” he said, emphasizing how performance-chasing often causes investors to join markets at peak times and leave before their time.
“The gold and silver surge, especially in dollar terms, has been impressive,” Azeez said. One of the biggest technical rallies has taken place. In essence, every potential obstacle has been overcome. Therefore, in my opinion, this is not the ideal moment to purchase. He warned that even while there is a lot of pressure to join, inflows motivated by FOMO may not last, and a little break is probably in order.
The financial managers emphasized the importance of long-term portfolio strategies above fads. “If investors choose the proper fund managers, median equities returns are still likely to beat commodities like gold over a five-year rolling period,” Azeez said, highlighting the importance of active management in producing excess returns.
In order to balance the appeal of precious metals with stocks and other asset classes, investors—particularly high-net-worth individuals—are readjusting their allocations. Even if the metals boom has garnered a lot of attention, Azeez said that careful, methodical investment is still essential. “We will pursue Net-Net’s historical performance, but not for very long. The flows will become somewhat more acceptable when the rally ends and there is some sideways or downward movement, he said.
Wealth managers are advising their customers to consider gold and silver as a component of a larger diversification plan rather than as a short-term investment as year-end draws near. Given the impact of behavioral biases like FOMO and recency bias on investment choices, the advice is straightforward: surviving the present rise requires strategic patience, cautious allocation, and reliance on knowledgeable fund managers.