Gold pairs well with EM
Dual nature of holding gold
Gold has performed well over time with returns on pace with the S&P 500 over multiple time periods (see chart below). It is not simply a hedge that eats into net returns, but it also provides the diversification for investors during strong and weak market environments.
Emerging market growth and potential
EM investments have a tremendous amount of potential to continue growing and play an ever-important role in an investment portfolio. This is supported by global economic growth, which tends to have an incremental effect on performance in emerging versus developed countries.
Additionally, nearly two-thirds of global gold demand comes from emerging markets. Over the long run, income growth is a key driver of gold demand, especially in EM countries where there is an affinity for gold. Having gold exposure in an EM portfolio therefore couples with the EM exposure itself.