Safe Haven Assets

A safe haven is a term that refers to an investment that is anticipated to maintain or increase in value during times of economic downturn. Such investments are believed to be a safe option for investors, as they are not correlated to the economy – meaning that a financial crisis would not reduce the value of the investments. Therefore, safe-haven investments offer more protection and diversification in investors’ portfolios, which is advantageous if the market is volatile. Trade wars, natural disasters, the Global Financial Crisis in 2008, and the COVID-19 pandemic are all events that prompted investors to buy safe-haven assets in order to mitigate their losses from a potential stock market crash. Investors looked to purchase “safe” assets, such as gold, treasury bills, government bonds, and defensive stocks.