Many investors are exploring options beyond shares to diversify their portfolios, with gold, bonds, and property funds gaining attention. Access to these asset classes has improved, with most ISA platforms now listing gold ETCs, gilt ETFs, and REITs alongside ordinary shares.
Gold reached a record high of over $5,500 an ounce in January 2026, although it subsequently gave back some gains. It is often seen as a safety net during market downturns, having finished up in 2008 and 2020 when stock markets experienced heavy losses. An allocation of 5% to 10% of a portfolio is suggested for gold.
Bonds, particularly gilts, have become more attractive since the Bank of England hiked Bank Rate to 5.25% in 2023. While the Bank Rate has since been held at 3.75% since December 2025, gilt yields remain higher than in the previous decade. However, longer-dated bonds could lose value if rates climb again, a risk present with August 2026 inflation at 3.1%.
For property exposure, Real Estate Investment Trusts (REITs) offer a way to invest without directly owning buildings, as they trade on stock exchanges. Open-ended property funds, which hold physical buildings, have faced liquidity issues in the past, leading to withdrawal freezes for investors.
These diversification options can be held within a stocks and shares ISA, making any gains and income tax-free. However, investors should be aware of ongoing charges, which can be higher than for equity trackers, and potential currency exposure for assets like gold ETCs, which are often priced in dollars.