8-10% of one’s portfolio should be allocated to precious metals: Tapan Patel, Tata AMC

financialexpress.com:

Tata Asset Management has announced the launch of 4 NFOs — 2 Exchange Traded Funds (ETFs) and 2 Fund of Funds (FOF). These funds will provide investors an opportunity to take exposure to gold and silver, respectively, as an asset class with low transaction costs, high liquidity and low expense ratio.

On this occasion, Sanjeev Sinha of FinancialExpress.Com caught up with Tapan Patel, Fund Manager-Commodities, Tata Asset Management, for his views on whether an investor should include gold and silver ETFs in his investment portfolio, and how much of one’s portfolio should be invested in precious metals? Excerpts:

Should Gold or Silver ETF be part of one’s strategic portfolio?

Gold and Silver ETF units represent physical metals in demat form which can be easily traded on an exchange platform during the trading hours of ETF. An investor may reap the benefits of value appreciation, asset diversification and high liquidity with ease of investment at minimal cost. Gold and Silver ETFs are tightly regulated investment instruments. Hence they are considered as one of the safest investment instruments against physical holding.

Also Read: Gold Prices Are Rising: Should you buy now or wait?

What is your outlook on gold and silver prices?

Gold prices have been on a stellar run recently with domestic gold prices hitting all-time highs in the month of December 2023, rallying nearly 17% for CYTD. Gold prices may remain elevated over the medium term considering global macros and geopolitical factors. The ease in inflation numbers, weakness in the job market and geopolitical risks have boosted market sentiments towards sooner interest rate cuts. Silver prices have capped gains compared to gold due to lower demand from the industries.