Pension Funds Flock to Gold Amid Rising Bond-Equity Correlations

Pension funds in several countries are increasing their allocation to gold as a hedge against rising bond-equity correlations and declining government bond diversification power, according to the World Gold Council. Funds like Pensioenfonds PDN (€7.7 billion) have reallocated up to 10% of their government bonds to reach a 5% gold stake, while Fairfax County Retirement Systems holds about 3% in gold futures. Now: Pensions Master Trust (UK, £8+ billion) and NGS Super in Australia maintain roughly 2-3% in gold alongside sovereign bonds as a defensive hedge.

The World Gold Council notes that there is no common 'target' allocation to gold among pension funds, with usage depending on each fund's funding level, governance, and risk budget. The council also points out that central banks have doubled their annual bullion purchases to around 1,000 tonnes, reinforcing a structural bid under the asset class.