Friday, November 20, 2009

The Debts of the World: Commodity Funds See Investor Inflows Hit Record High This Year

Commodities ‘09 Investment Inflows Head To Record $60B - Barcap

Investment inflows into commodities are heading for a record high of $60 billion this year to reach a total of $230 billion to $240 billion of commodity assets under management, said Barclays Capital in a note dated Thursday.

Strong inflows during October have continued into the current month, and year to-date allocations into the commodity sector are approaching $55 billion, displacing the previous record of $51 billion during 2006.

“Absent any significant reversal in the macroeconomic outlook, we expect investment flows to remain strong throughout the fourth quarter 2009, heading for a record high of $60 billion for the year as a whole and with commodity AUMs likely to end the year at about $230-240 billion,” Barclays said.

During November, commodities such as copper and gold rallied sharply, with market participants frequently citing a “wall of money” hitting the market as investors picked commodities as an alternative investment.

This week, London Metal Exchange copper hit a 14-month high of $6,992 a metric ton, and gold peaked at a record high of $1,153 a troy ounce. A weakening dollar and ultra-low U.S. interest rates encouraging carry trades also boosted commodities’ profile.

Barclays Capital predicted different commodity markets to take on a more “nuanced” view of supply and demand fundamentals, resulting in a more differentiated price performance within different sectors.

Source CME News for Tomorrow
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