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PENSION funds should consider buying more fine art if they are looking to diversify their investment portfolios, according to a new study examining investment performance going back to 1899.
The latest Equities and Gilt survey from Barclays Capital shows art has comfortably beaten even equities – traditionally the best long-term way of saving for retirement – during periods of both above-trend inflation and economic growth.
Since the Second World War, art has also come a close second to shares for total returns even during periods of low inflation and high economic growth
The findings demonstrate what Barclays sees is a pressing need for pension funds to ‘get back to the basics of diversification to hedge against both low and high inflation’, according to head of fixed income strategy Tim Bond.
Since the Seventies, most pension funds have piled up to 70% of savings into equities with the rest generally split between bonds, property and cash.
Over the past 35 years during low inflation and high economic growth, investing in commodities from metals to oil and gas has been the best performer with total returns of 15% compared to 11% for property, 10% for equities, 9.6% for art and 1% for bonds.
Equities still come up trumps as the best long-term investment compared to bonds and cash, covering both high and low inflationary environments.
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