What is a Safe Haven Investment?

Fans of bitcoin say it trumps gold as a safe haven asset, so Morningstar analysts have created a framework to determine what a safe haven investment is

Kristoffer Inton 15 August, 2018 | 8:53AM

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Amid their meteoric price rises of 2017, bitcoin and other cryptocurrencies garnered mainstream attention and legitimacy as an asset class. Some went so far as to posit the idea that cryptocurrencies could replace traditional forms of currency or assets, including gold.

As a first step in determining whether cryptocurrencies should be considered safe-haven assets, we need to define what safe-haven assets are. For our purposes, we classify an asset as a safe haven if it holds, or even increases, its value during periods of market and economic uncertainty and downturns. The asset should preserve capital, withstand market volatility, and provide diversification across a portfolio.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author

Kristoffer Inton  is an Equity Analyst for Morningstar

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