Coronation has a warning for South Africans invested in gold

Despite missing out on record-high gold prices in 2025, Coronation believes holding the precious metal at its current price carries a considerable risk of capital loss for investors.

Thus, the asset manager is set to maintain an underweight position in gold, saying that recent market movements have only reinforced their conviction.

These comments were made in Coronation Fund Managers’ interim results for the six months through March 2026.

These results revealed a decent performance from the asset manager, with revenue up 3% to R2.09 billion, slightly outpaced by operating expenses, which grew by 4% to R1.19 billion.

The group reported a profit of R770 million for the six-month period, up 6% from the first half of the 2025 financial year.

Coronation’s basic earnings per share also rose by 6% to 218 cents, while its basic headline earnings per share were down 5% to 195.1 cents.

The asset manager explained that its funds performed well, with 92% having outperformed their benchmarks since inception, 91% outperforming over 20 years, and 67% outperforming over the past decade.

However, while its long-term performance remains strong, the group explained that its domestic equity portfolios came under pressure in 2025.

This is because these portfolios were underweight in gold shares, and therefore missed out on sky-high gold prices over the past year.

Coronation explained that the elevated gold price drove a strong bull run in 2025. In fact, gold experienced a historical bull market in 2025, averaging an all-time record of $3,431/oz over the year.

Therefore, being underweight in the precious metal, Coronation’s local equity portfolios were impacted. However, the asset manager said this was a deliberate choice.

“Recent market movements and the reaction of the gold price have reinforced our conviction that the risk-adjusted case for holding these assets at current prices carries a considerable risk of capital loss for investors,” it said. 

After reaching another all-time high in January, the gold price has fluctuated significantly since the outbreak of the Middle East war in late February, recently driven by any positive or negative developments in peace negotiations or conflict escalations.

Its safe-haven status has drawn many investors to gold stocks amid the increased uncertainty, though the price has slumped by roughly 15% since the war started.

Rather than riding that wave, Coronation said it is more excited by the “extraordinary” stock-picking opportunities that it believes will come from recent market dislocations.

A tale of two quarters

Aside from the gold price, Coronation explained that this six-month period was a tale of two quarters: global markets ended 2025 on a high, while the first three months of 2026 were marred by the Middle East conflict.

“What had been a constructive start to the year gave way to a sharp risk-off move, as the geopolitical and economic consequences of the conflict became apparent,” the asset manager said. 

“The oil crisis has affected all economies and will profoundly affect geopolitics and geoeconomics for years to come.”

The group said it is particularly concerned about how the oil crisis will affect South Africa’s nascent economic recovery and local consumers’ wallets.

Coronation warned that a sharp increase in fuel prices – which South Africa is already experiencing – will affect all parts of the economy and stretch already-limited household budgets.

Despite this, the group said there are encouraging signs in South Africa’s economy, which have provided a basis for cautious optimism.

The asset manager highlighted South Africa’s exit from the so-called grey list and the country’s sovereign credit rating upgrade from S&P Global as important steps to restoring financial credibility and investor confidence.

Coronation also pointed to improvements in key state-owned entities that further back up its cautiously positive outlook.

This includes a stable power supply and tangible progress in energy reform, early signs of recovery in transport and logistics infrastructure, and intensified efforts to address crime and corruption. 

“The appetite from the government to involve the private sector, leveraging available skills in assisting with these reforms, is to be commended,” it said. 

“This reform momentum will likely increase as private sector participation gains traction.” 

However, the asset manager sounded the alarm over South Africa’s struggling water infrastructure and supply and the condition of many local municipalities, saying these factors remain “of grave concern”.