What are the main safe haven assets that exist today?

The particular historical moment we are going through, characterized by a complicated macroeconomic scenario, has encouraged a strong desire to protect one's portfolio, resulting in a move toward investments in assets and/or assets that are a durable source of economic security.

Protecting your portfolio implies a choice that revolves around the so-called safe havens. By safe haven or quality assets, we mean particular assets that have a steady demand even in a period of economic instability. Investors choose to invest in these assets to limit their losses and protect their portfolios during bearish market phases. Safe haven assets are real cornerstones in the economic environment, even though they may fluctuate slightly. Therefore, they must prove to be stable and long-lasting and have high liquidity, in case the market requires it. In general, we can recognize the main types among those presented below:

  1. The refuge asset par excellence is gold. At this stage of the market, this commodity is particularly favored, precisely because of the Russia-Ukraine conflict. For further discussion, please refer to an analysis presented recently How the pandemic and war sent the price of gold and precious metals soaring.
  2. High-quality government bonds: U.S. Treasuries and German Bunds are assets in which investors do not lose confidence, as a result of the soundness of the countries in question.
  3. "Stable" currencies: some currencies are considered of higher quality than others. The dollar is the world's leading reserve currency: more than 60 percent of global central banks' reserves are denominated in dollars. The Swiss franc is also known as the ultimate safe-haven currency, given the stability of the Swiss government and its financial system.
  4. Stocks of essential companies: not all market sectors are affected equally during economic downturns. Some companies are generally stronger against certain events, see, for example: utilities (water, electricity, gas, etc.), basic consumer goods (food and basic necessities) and health (health care, pharmaceutical, para-pharmaceutical companies). These are considered countercyclical goods, since even in a crisis, consumers need these services.
  5. The financial sector, real estate, and new technologies, sectors normally favored by investors, are put on the back burner as migration to safer havens is preferred at certain historical moments.

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