BLBG: Commodities to Get Record $60 Billion, Barclays Says (Update3)
By Stuart Wallace and Chanyaporn Chanjaroen
Nov. 20 (Bloomberg) -- Commodities will likely attract a record $60 billion this year as investors seek to diversify their assets, Barclays Capital said.
Inflows so far this year are almost $55 billion, already more than the previous full-year record of $51 billion set in 2006, the bank said in a report. Total commodity assets under management will probably expand to $230 billion to $240 billion by the end of the year, Barclays said.
“Sharp falls in commodity prices earlier in the year created opportunities for long-term exposure, providing an opportunity for investors to act on their interest in commodities as a diversification tool,” analysts including London-based Gayle Berry and Suki Cooper said in the report.
The S&P GSCI Index of 24 commodities rose 46 percent this year, rebounding from last year’s 43 percent slump, as governments spent at least $12 trillion to lift their economies from the worst recession since World War II. Copper, lead and sugar doubled and gold reached a record.
Barclays’ data cover exchange-traded products, U.S. commodity-index-linked mutual funds and so-called medium-term notes, which are customized products.
“A strong end to the year for commodity prices does look likely, especially if the dollar continues to weaken, which should be especially beneficial for gold,” the analysts said.
Gold Trust
Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, reached a record 1,134 metric tons in June. At the time, it exceeded Switzerland as the world’s sixth-largest gold holding.
The Dollar Index, a six-currency gauge, fell 7.3 percent this year, buoying demand for commodities as a hedge against further weakness in the currency and making dollar-denominated commodities cheaper for those holding other monies.
Commodity funds accounted for almost three-quarters of inflows this year, including bonds, equity and emerging markets, said Chicago-based EPFR Global, which tracks funds holding $10 trillion worldwide.
Investment products linked to commodities attracted $1.34 billion in the week ended Nov. 18, the most in 3 1/2 years, bringing the year-to-date total to $13 billion, EPFR said.
Funds investing in physical commodities, rather than stocks of commodity producers, “dominated the action,” EPFR said.
To contact the reporter on this story: Stuart Wallace in London at swallace6@bloomberg.net; Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net
