Caution and perseverance are the buzzwords for investors in the current economic turmoil. Traditional investment vehicles like equities, funds and property have been swept aside by the financial crisis since it hit the international markets last September. Most investors have taken a hit in these once-safe financial instruments in the past five months and there are no signs that things may get better any time soon. So where should investors park their money in the current climate? What are the safe havens, if any? According to financial advisers and fund managers, gold funds and the Hong Kong-listed Tracker Fund are still a safe bet. Louis Wong, a director at Phillip Securities, which manages over US$6 billion in funds, says gold funds are a safe haven when equity markets are in turbulence, as fund managers usually move into safer investment options like the yellow metal or silver at such times. 'The current downturn is severe and will last till at least the first half of this year. Gold is good for times like these,' he says. Alex Tang, director of research at investment house Core Pacific-Yamaichi, says gold investment is a good strategy in the current climate. 'Gold and fixed-income investments are much safer and in a way insulated from volatility.' According to Mr Tang, investors should set aside at least 15 per cent of their investment portfolio for bullion funds. Mark Konyn, the chief executive of Allianz Global Investors, which manages US$11 billion of assets in Asia, also sees gold as a particularly safe asset class. Gold has been consistently trading at above US$900 an ounce in Asia and the United States since the outbreak of the global financial crunch last September, and some investment houses have suggested it could range between US$1,200 and US$1,500 by the end of the year. Last week, it touched a seven-month high, with spot prices hovering around US$960 an ounce. The world's largest gold-backed exchange-traded fund, SPDR Gold Trust GLD, recently said it held a record 853.37 tonnes of gold as of February 5, up 9.78 tonnes from the previous month, and that it intended to buy the metal regularly. Fund managers and financial planners say this would help sustain high international gold prices this year. Another factor is the rise in demand from traditional gold markets such as India and China. China consumed 395.6 tonnes of bullion last year for jewellery and investment, or around 14 per cent of global demand, up from 327.8 tonnes in 2007, according to the World Gold Council. A barometer of gold's popularity can be gauged from the recent initial public offering by Real Gold Mining, which was oversubscribed three times. Mr Wong advises investors not to be discouraged by the short-term performance of various gold funds, most of which are down from their peak last year. 'But so are most funds in other sectors and single-country funds. Fund investment is a long-term investment and investors should be patient,' he says, adding investors should not treat fund investment like equity investment and indulge in day trading. The local fund industry registered a record outflow last year, with net redemptions reaching US$4.65 billion as investors withdrew their money during the market slump. Net redemptions peaked at US$1.94 billion in October, a month after the financial crisis deepened. Mr Konyn said: 'Clearly, investors have been spooked by falling markets and the outflows from funds have been high. In the short term this will continue, but investors still want to have mutual funds in their portfolio. They should have a long-term strategy when investing in funds.' Fund managers and financial planners say it is a good idea to spread your investment rather than putting most of your savings into one type of fund. 'Don't just focus on one sector or country-specific funds,' Mr Tang says. For those looking at country-specific funds, Mr Tang and Mr Konyn recommend China-invested funds. Mr Konyn says that even though the mainland's economic growth has slowed, the 4 trillion yuan stimulus package would start taking effect in the coming months. 'In the long term, China will become a global asset class in its own right,' Mr Konyn said. Mr Tang pointed out that Beijing had launched measures to help the auto industry. Investment advisers believe other sectors likely to get similar help from the government are information technology, electronics, property and banking. Funds investing in these sectors should get a boost in the second half of the year, they say. The Tracker Fund is another safe investment option, according to Mr Tang. TraHK was launched by the government in November 1999 to dispose, in an orderly way, of its stake in various blue-chip companies it bought during the 1997-98 financial crisis. TraHKs are traded on the Hong Kong stock exchange just like common stock. The aim of the trust is to replicate the performance - both in terms of yield and price - of the Hang Seng Index. Mr Wong points out that as each TraHK is composed exclusively of the constituent stocks of the Hang Seng Index, investors gain immediate diversification and exposure to the largest stocks in the market. Since TraHKs, unlike open-ended mutual funds, trade like stocks, it gives investors the option to buy or sell TraHKs at any time during the trading day. Moreover, as TraHKs are intended to track the Hang Seng Index, investors can tell how their investments are doing at any time. Mr Tang says that the main advantage of a Tracker Fund, apart from being a safe investment, is that they pay regular dividends to unit holders. Mr Konyn says: 'Investors have been hurt due to falls in blue chips, but if they need to invest in a fund that tracks actively traded stocks, I believe Tracker Fund is still a safe bet in the long run.'